News

Planar has mixed bag of financial results

November 6, 2003

BEAVERTON, Ore. -- There appeared to be a clear contradiction between Planar Systems Inc.'s record-setting annual and quarterly results and the sharp stock dip that followed the earnings announcement Oct. 22.

But the answer is in the margins, particularly the difference in gross margin offered by Planar's relatively specialized display products and those offered by the company's commercial products, according to an article in the Portland Business Journal.

Shares of Planar (Nasdaq: PLNR) dropped almost 8 percent on Oct. 23, the day after the company's earnings conference call, on trading volume that was nearly 10 times what it trades on many days.

Investors may have been disappointed with Planar's fourth-quarter gross margin, which fell to 28 percent from third-quarter gross margin of almost 32 percent. Perhaps the loss of 3 cents per share in fourth-quarter profits to an unexpected tax expense caused the next-day sell-off. Or investors may have felt that after growing revenue by more than 22 percent over the previous year, it was disappointing to hear Planar executives say that next year's revenue will grow by 9 percent, the article said.

The company depends on its commercial division, which consists mostly of computer monitors, for nearly half of its revenue. In the fourth quarter of Planar's just-closed fiscal 2003, the company made 49 percent of its revenue from the commercial division.

Now that Planar is the No. 9 supplier of LCD flat-panel monitors in the United States, according to research firm iSuppli/Stanford Resources, it has the power to buy LCD glass at lower prices than two years ago when it made just a small number of monitors.

Planar is now able to make money on computer monitors, while at the same time buying better-priced glass for its medical monitors and industrial products, such as kiosk displays, the article said.