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Thursday, June 02, 2005

Navarre (NAVR) posts Q4...a bit late

So after I spent considerable time laying out the bull case and arguing why I thought NAVR was going places, they up and missed their own filing date. Amazing! I was this ][ close to selling, but the action in the stock on the day after was surprisingly strong -- which I took to be a sign that the stock has a HARD floor at current levels.
I just looked at the Q4/2005 earnings release and I must say that it is fairly encouraging. Below are the guidance points provided by the company:
    Fiscal Year 2006 Guidance:

-- The Company anticipates net sales between $710.0 million to $720.0 million
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)
between $43.0 million and $48.0 million
-- The Company anticipates integration expenses related to the FUNimation
acquisition of $1.0 million for fiscal year 2006 and has been reflected
in the guidance.
-- Earnings before interest, taxes, depreciation and amortization (EBITDA)per
diluted share of $1.36 and $1.51, based on weighted average shares
-- Net income anticipated between $18.2 million and $21.5 million.
-- After tax earnings per diluted share anticipated between $0.58 to $0.68,
based on weighted average shares outstanding

They increased sales and EBITDA expectations and I'm willing to bet they've still got some dry powder left. I'm going to continue to hold the stock and hope they don't have any more serious reporting missteps. Unfortunately, the fast money will sell on any strength from this earnings announcement and wait to buy in right before the next quarter.
The CEO, Eric Paulson, apologized for the reporting snafu, but I'm not sure that I'm satisfied with the apology. That mistake, so soon after the liquidity and acquisition financing snafu is evidence that the CFO and CEO need to be changed out. I would be much more comfortable with a change of leadership as this company appears to be loosely managed.
Regardless, I think they've got a good strategy and the stock will have good things ahead of it...IF they can keep operations and finances under control. I can only imagine that GE Capital is a bit nervous about the $160MM(ish) they put on the line here.


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