i very much doubt they will get back to $4 anytime soon.Look at...

i very much doubt they will get back to $4 anytime soon.

Look at the fundamental issue:
their prices are much more expensive than online.

Therefore they need to become more price competitive.

This will effect margins as per the post above.
Operating Margins have constantly risen from 6.2 in 2002 to 13.9% as of June 2010.

Now we know from the profit announcement that DJ has been left with too much inventory.

Why?
because its trying to flog it off at unrealistic prices.

This is a structural problem, not an operational one.

Why?
because people are becoming comfortable with online purchases.

There is a strategic shift in consumers mentality which is not just because of the economic times.

So firstly DJ's will need to dumpt that excess inventory.

But then what does it do?

Does it sell with high margins and much lower compared to historical sales? Or does it try to maintain sales but at much lower margins?

Eitherway there will be a STRUCTURAL downwards shift in earnings from recent times.

Sorry i am a very much a value based player, but i just cant get a feel for forward estimates. And its those future earnings that will dictate the future shareprice, not a price chart.

Having said all this, the share price has dropped so much from recent times, that at current levels ($2.60) i guess if one is already in, then they can hold, i wouldnt short at these levels. But not really interesting in buying either.

I will focus on trying to find companies that are increasing future earnings.