“Just as the Apple iPhone launches in Europe, a German company that analysts believe is the major supplier of its unique touch screen is under fire for its financial practices and lagging profitability. Balda (BADG.DE), which makes touch screens in Xiamen, China, via a joint venture with Singapore-based TPK Holding, raised eyebrows on Oct. 31 when it sold $50 million in ‘convertible profit participation rights’ to unnamed institutional investors,” Jack Ewing reports for BusinessWeek.
“The 8% interest rate on the paper, which is similar to a bond that can be converted to stock, struck analysts as too expensive, and they expressed frustration with the sparse information that Balda management disclosed about the reasoning behind the issue. Analyst Tobias Loskamp of BHF-Bank in Frankfurt, who’s normally bullish on Balda, criticized management’s ‘needless lack of transparency.’ A Balda spokesman said the company, which just hired a new chief financial officer, is striving to improve disclosure,” Ewing reports.
“Neither secrecy-obsessed Apple nor Balda has ever confirmed that Balda is supplying screens for the iPhone… Balda is probably also supplying touch-screen components to the new iPod Touch, says BHF-Bank’s Loskamp, who continues to rate the shares a ‘strong buy.’ However Apple, which historically does not like to be too dependent on any one supplier, also is commissioning screens from other companies such as Japan’s Sharp, industry watchers say,” Ewing reports.
“Balda’s future hinges on continuing to remain in Apple’s good graces as bigger rivals try to duplicate or beat its technology,” Ewing reports.
More in the full article here.
[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]
Opaque accounting is just fine provided the profits keep rolling in, as with Microsoft. Except their share price has been static for years and because of their accounting it is not even possible to be sure they have made profits. Like 20 million Vista sold (many in the channel waiting to be returned) and that $500m ‘spent’ on advertising for Vista (did you see it?) Maybe they spent the advertising money buying Vista so they could get the PR value, there are lots of ways to juggle around these sums of money.
If Balda is an Apple supplier then it is not surprising that the financial whizzes and analysts are after them, they have a lot more vested in seeing Apple fail than succeeding. They have big positions in established players in many markets, computers, software, telecoms, music etc and will seek to undermine disruptive companies like Apple any way they can.
I have a friend who has a cousin who knows someone in China who uses a credit card with a high interest rate. Of course that’s never been confirmed.
“Maybe they spent the advertising money buying Vista so they could get the PR value, there are lots of ways to juggle around these sums of money.”
And just maybe, Microsoft’s new $500 million data center in Dublin, Ireland and its multi-million dollar new data center in Chicago are being constructed with Vista installation DVDs?
If they’re both translucent and built with annoying security features, we’ll know the truth. “When you see it, you’ll say it.”