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Blue Lasers Lead the Wave
for HD DVD's at Infosmart Group, Inc. (OTC. BB: IFSG) by Greg Moses - AllPennyStocks.com News Reporter
January 9, 2007 (AllPennyStocks.com Media Inc.) - HD DVD's
represent the new wave of the future for DVD's, as they offer
high density for high definition at the lowest cost per
megabyte.
High Definition is quickly becoming the standard for
consumer electronics, gaming, and entertainment systems. The
overwhelming consumer response to the recent marketing and
sales launch of the Playstation 3 reveals a lot about consumer
trends.
Images of long lines of waiting customers, camped out
overnight at retailers, coupled with game console wars between
major manufacturers, provide key evidence of the consumer’s
appetite for state of the art high definition technology.
Over the next few years, consumers are set to upgrade to
next generation HD DVD’s. As HD DVD’s and Blu-Rays, are rolled
out by entertainment producers, equipment manufacturers are
expecting an electronics boom very similar to the one as last
seen when DVD’s replaced VHS tapes.
The DVDR market is exploding as consumers are always
looking for better picture and sound quality for movies and
larger capacity for data storage. The DVDR represents the
number one device in the world at a cost per megabyte. DVDR
cost per megabyte is 1 cent. This compares to 24 cents for
floppy discs and 3-6 cents for your “C” drive.
One Industry leader, Infosmart Group, Inc.
(OTC BB: IFSG), is a highly profitable, recordable DVD
manufacturer, who is boldly seizing the future by launching
two powerhouse business initiatives in tandem.
The two major DVDR business initiatives, underway at IFSG
compliment the Company’s business model which is to offer HD-DVDR
for mature markets and traditional DVDR for developing
markets. The Company is poised to be a dominant player in the
segment, as it holds both the high end and low end sectors.
IFSG is targeting mid-2007 for the launch of its new HD
DVDR production, at its Hong Kong production facility. As the
Company upgrades its existing production equipment, it will
ultimately have 36 production lines in place for a potential
manufacturing capacity of 9 million DVDR discs or 6.1 million
HD-DVDR discs per month.
In the format battle between HD DVD and Blu-Ray, Infosmart
is well positioned with a close eye on the future and will
only enter the HD DVD market, at the right time. Analysts
expect consumers at the retail level to respond favorably to
the less expensive HD DVD discs. Cost benefits due to lower
re-tooling and capital expenditure costs for HD DVDR
manufacturers versus Blu-Ray will be recognized by the
consumer.
Consumers appear to be adopting the HD DVD format at a
faster rate than Blu-Ray, as evidenced by the fact that more
titles are available in that format and more HD DVD players
are sold versus Blu-Ray.
Of course, nobody knows who will ultimately win the format
battle, but the business key is to be ready and prepared. Many
Industry experts foresee a dual or unified format emerging as
the future solution supporting both Blu-ray and HD DVD
formats. Chip makers such as NECElectronics and Broadcom Corp.
have announced chip systems that will work with both
standards.
Currently, manufacturing at the Company’s Hong Kong
production facility, runs at a rate of more than 11 million
discs per month. That type of volume generated $12.5 million
in revenue during the first six months of 2006. The Company’s
success is not only its high production levels, but also its
operating profit margin. Infosmart ranked # 1 among its peer
group, at a very high 21.2%.
The key in Hong Kong is that the existing production lines
are totally upgradeable for the production of HD DVD’s. This
means lower capital expenditures and minimal investment risk.
When the market is ripe, Infosmart will make the switch as
next generation HD-DVDR discs become the market force in 2007.
On the other business front, a lot of excitement is being
generated both inside and outside the Company regarding its
new Brazilian production facility, Infosmart (Discobras),
which is scheduled to come on stream beginning early in 2007.
This facility will have a plant capacity of 6.4 Million discs
per month, when at full production. This will quickly
establish IFSG as the largest DVDR manufacturer in Brazil.
Brazil has a large population of nearly 200 million and
represents a huge market for the Company. Brazil and all of
Latin America represent a truly untapped consumer market for
traditional recordable DVD sales.
In 2005 there were approximately 60 million televisions in
Brazil, but only 4 million homes had DVD players. As Brazil’s
televisions reach developed country levels, DVD players and
DVD discs will greatly expand. Brazil does not have a large
dominant domestic manufacturer of recordable DVD’s.
Infosmart (Discobras) in Brazil has a winning business
strategy in place for success as a Brazilian domestic
producer. For one thing, Infosmart will be able to undercut
prices of competitor imported discs that carry the 12-18% VAT
tax. Infosmart (Discobras) has been approved for a preferred
and very selective Government Incentive Program that
eliminates the VAT tax for IFSG.
In anticipation of strong sales, Infosmart earlier this
year opened both a sales office and warehouse in Sao Paolo.
Further, they have established distributors in Rio de Janeiro,
Mina Gerais, Sao Paolo, and Maranhao.
The business climate for recordable DVD’s in Brazil and
Latin American in general, is much less price competitive, as
demand in the region far outstrips supply. IFSG anticipates
that this factor will help contribute to an even higher profit
margin for the Brazilian facility. Infosmart believes margins,
from the Brazilian facility will be significantly higher than
those of Hong Kong.
With its aggressive two track strategic plan which includes
the new HD DVD production capability in Hong Kong combined
with the new Brazilian plant, Infosmart’s financial prospects
look very bright. Company gross revenue projections rise
dramatically to nearly $27 million for the full year 2006, and
$50.9 million and $63.8 million in 2007 and 2008,
respectively.
Infosmart Group, Inc. is a very attractive, profitable and
growing Company that is executing a solid business plan. Disc
media will be the primary storage media for decades ahead, due
to its high capacity, portability, and low cost.
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