I have been given a challenge by Louis who writes a blog with excellent write ups on individual companies, specialising in small caps and AIM listings, to write an article on a company of my own choice. Well, I chose Expansys, the AIM listed supplier of geek stuff.
Apologies for the length of this post but I wanted to make sure I covered ALL the important developments in this company’s story.
For the more experienced market participants out there, please add your thoughts and comments to this analysis in the ‘Leave a Reply’ form at the end.
Disclaimer: This is article is based on publicly available information and does not constitute investment advice. AIM listed companies are extremely high risk. I do not currently have a position in Expansys.
Take one look at the Expansys (XPS) website and you will be struck by the sheer number of electronic gadgets on display. Everything from mobile phones and games consoles, to tablets, laptops and cameras.
This is deliberate. Expansys have recently upgraded their on-line presence which has included optimising the website for smart phone and tablet users enabling a better browsing experience.
The management market Expansys as ‘a leading global on-line retailer of wireless technology and provider of mobile network solutions‘.
Consider the AR.Drone Quadricopter – the world’s first flying video game. Its a four-propellered helicopter, designed for both indoor and outdoor use controlled remotely by iPhone, iPad or iPod touch. That’s pretty neat.
Then there is the recently signed agreement with T Mobile in the US to become a distributor in the pre-pay and SIM-only handset market which is underdeveloped as compared to Europe. Even more recently, Expansys has signed a two year deal with Aiptek, an international manufacturer and retailer of consumer wireless devices, to deliver website development, marketing, stock management, customer transactions and customer services and support. It seems that Expansys’ expertise is highly sought after.
In the most recently announced deal, CTA Digital Inc, a US based video games accessories business, has installed Exspansys as the exclusive distributor in China, Taiwan and Hong Kong and on-line channels in Japan and Korea. These are huge markets.
Expansys shows all the signs of a classic business trying to turn its fortunes around: in January 2010, it appointed a new CEO, Anthony Catterson, previously Managing Director of Carphone Warehouse (CWP), prior to this he was managing director of Phones 4U.
In May of the same year Timothy Eltze was appointed to the newly created role of Chief Operating Officer who is also at Data Select, a distributor of mobile phones. In May this year Chris Ogle was appointed Chief Financial Officer with over 25 years experience as a finance professional, 10 of those years for AIM listed companies.
These appointments appear to be in line with current strategy to become a global on-line technology superstore the first stage of which has been completed: the acquisition of Data Select Network Solutions and PJ media. The second stage is also playing out with the T Mobile and Aiptek deals.
Expansys first came onto my radar on the 26th July this year when 47.5 million shares changed hands when it’s twenty day average was only 6 million. The reason being was that two Chairmen, the CEO, the Financial Director and a Non-Executive Director bought shares in their own company. Lots of them. The most high profile buying of Expansys’ shares was made by Peter Jones of Dragons Den fame who bought over 35m shares on 12th August this year.
There is one negative though.
A profit warning earlier this year blamed on weaker UK and European sales in the run up to Christmas (Nov – Dec). Management has said that was due to the weather being so bad in the UK that consumers lost confidence in the ability of on-line retailers to deliver their goods. This excuse does not cut the mustard and I would hope that management will in future make arrangements for adverse weather conditions. More importantly, CEO Anthony Catterson said that ‘recent difficult trading conditions are likely to contribute towards a significantly reduced profit expectation’. In other words, management feels that they will likely make less money over the near to medium term.
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