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K2 Inc. Prognostications

post #1 of 9
Thread Starter 
I hope this isn't too geeky a subject, but would anyone like to take any guesses, informed or otherwise, on how K2 Inc. (not just the ski bit, but the whole shabang) is going to perform this year as a company? They've bought a lot of stuff in the last few years. Wonder if they're going to be able to handle it all. Thanks in advance for any replies!
post #2 of 9
I think I read that the bottom fell out of the paintball market.
post #3 of 9
K2 will survive on it's past if nothing more. They always produce a great line of skis. The only thing that bothers me now is most, if not all of their skis are made in China.
post #4 of 9
Thread Starter 
Well, I took the plunge and bought a load of K2 stock. Can't believe I did this. Those bastards better perform now! I'm hoping to get enough of a return to buy a ski pass. My new signature needs to be something like, "K2 Is So Undervalued." I know, boring, self-involved stuff, but I've never spent so much money on anything ski-related and I feel nervous.
post #5 of 9
Originally Posted by troutman
I think I read that the bottom fell out of the paintball market.
Troutman, I'm impressed. Looking at their their 10-Q SEC filing for August - 05, paintball sales has the potential to significantly affect this company:

In the Action Sports segment, net sales were $65.1 million in the second quarter of 2005 as compared to $69.2 million in the prior year's second quarter. The overall sales decline was due to lower sales of paintball products of $8.3 million, snowboards of $3.5 million and bikes of $2.2 million, partially offset by net sales from the acquisition of Vlkl and Marker in the third quarter of 2004 of $10.7 million. The decline in sales of paintball products reflects soft consumer demand in the industry. In the event that consumer demand continues to remain soft for paintball products, this could have a significant negative impact on net sales, gross profits and operating income in future periods for the Action Sports segment.
In a July Bizjournals report:
A series of acquisitions lowered profits for K2 Inc. 76 percent in the second quarter.Profits were $1.45 million or 3 cents a share, compared with $6.17 million, or 18 cents a share, the company said Wednesday. The earnings were below analyst estimates of 4 cents a share. The drop stems from the buyout of Volkl, Marker and Marmot in the third quarter of 2004. K2 said those product lines have large fixed expenses and sales are seasonably slow in the first and second quarters.
In a Motley Fool article "K2 Chokes on Acquisitions" the question of profitability seems to be up in the air.

wbron, what did the prospectus say? You may be living up to your signature after all
post #6 of 9
Thread Starter 
Originally Posted by Cirquerider
wbron, what did the prospectus say? You may be living up to your signature after all
Oh, hell, I don't know what I'm doing, Cirque, and you're probably right that this was a dumb idea. I just did my own research by reading articles about K2's business and studying the industry a bit. I did see that Motley piece and several others. But overall, the industry looks good, and that made an impression on me. I'm also hoping -- perhaps stupidly -- that I'll get a modest return in the undeniable fact that K2's stock has risen every winter, except for doldrums in 1999-2001. If you've got a better pick, I'm all ears/eyes!
post #7 of 9
I never know for sure / I feel a buy USA backlash comming.
post #8 of 9

maybe it's a smarter purchase than you think

Have you ever wondered what the largest untapped market in the world is for recreational equipment. I thought about writing this to the earlier post about new ski resorts and didn't. I think the "Potential" growth rate in recreational equipment (and maybe many other things American) in China over the next 10 years could be tremendous. Of course, K2 could also find that their designs and other patented information suddenly starts showing up in a new, local-brand of chinese or korean skis.

The aspect of cheap labor in China is certainly a factor, and there may be some backlash associated with moving that off-shore, although we don't seeem to much care where our computers/refrigerators/tv's most anything else is really made.

On the other hand, companies seem to seldom do well with integrating acquisitions. It seems like they buy other companies trying to grow (or appear to grow) and a few years later someone realizes that the individual companies are worth more in the stock market than the value of the conglomerate. And then, 5 years later we see the cycle again.

Overall, I think your purchase is a reasonably stable one over the short term with some tremendous upside potential.
post #9 of 9
I'm skiing related. If you want to piss away money, piss it my direction.
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