Ann: Appendix 4C - Quarterly Report with commentary, page-66

@McKhenry there are a lot of moving parts to forecast the size of the Dec quarter profitability. The quarter doesnt really matter, its the whole year that does.
Eg the underlying strength of the US and global economy, the trade war, advertising campaigns by Amazon and google, costs savings from better planning on transportation, what Philips and sengled are prepared to spend to capture market share etc etc.

What is certain is that this Smart home automation is just at the starting line and LIFX quality is respected and loved by the big guys. They wont get in a race to the bottom of prices at the expense of margin. Undoubtedly, prices will come down but this does not automatically mean margins are squeezed. For LIFX side a $1 reduction in manufacturing costs equates to $4.50 at the retailer. So as the scale increases the manufacturing costs fall. The cost will fall more for LIFX than say Philps or Sengled as they had been previously hamstrung by having to use Eastfield and accept the price they set. A competitive tender process is now in place which has already resulted in cost savings, throw in the fact they don't have to pay the trump tariff and the profitability jumps significantly. As a guide, last year the Oct-Dec revenue was $17m and $2.2m was paid in Trump taxes. If they achieve my estimated $40m revenue, they would have been up for $5m in tariff that they wont be paying. Remember, they said they would be profitable when the tariffs WERE being paid and accounted for.!!

But a lot of water to pass under the bridge until then. I remain confident that this will happen at LIFX and give OHMWW enough time and money to establish itself in its own rights. And so intend to HOLDTIGHT.