FOH

[nullzero]

Good time to get into MSI? Whats your take david

[WallStreetnBio]

Why not add SILC to the main? Looks like a powerful long term stock.

[David Randolph]

Good time to get into MSI? Whats your take david

Anytime is a good time to buy MSI. I won't sell it below $6.

Why not add SILC to the main? Looks like a powerful long term stock.

You're right prodigykid6. I should have bought it for the Main. Perhaps I will, I need to make some more studies on it.

Thanks, have a nice weekend

[David Randolph]

MSI is really getting ready to breakout above $2.75, just look at the chart on the bottom of this post. That technical breakout will probably take it towards $4 - $5.

Fundamentals certainly warrant that, as you can check on previous posts on this thread. Let me check again the main reason for this investment: www.fredericks.com

hmmm nothing changed, but attractive as usual . I wonder when will they start selling internationally again.

[berloga]

Yesterday spent $50 at the Fredericks for the Valentine's day. They got nice stuff. Although I live in the US I am from the Eastern Europe originally. Women do not flaunt in the US as they do in the European countries and we used to buy much better lingerie in France, Holland and Germany than in the US. Americans are more conservative and less imaginative in that respect. Fredericks' imports many items from their collection, I presume from Europe. Hence it may be wiser for them to open a distribution chain internationally rather than ship overseas. This way they can also adapt their collections to please local tastes. One thing  for sure, they are a worthy competition to Victoria Secters.
In MSI at $2.5. Thanks, David.

[David Randolph]

Yesterday spent $50 at the Fredericks for the Valentine's day. They got nice stuff. Although I live in the US I am from the Eastern Europe originally. Women do not flaunt in the US as they do in the European countries and we used to buy much better lingerie in France, Holland and Germany than in the US. Americans are more conservative and less imaginative in that respect. Fredericks' imports many items from their collection, I presume from Europe. Hence it may be wiser for them to open a distribution chain internationally rather than ship overseas. This way they can also adapt their collections to please local tastes. One thing  for sure, they are a worthy competition to Victoria Secters.
In MSI at $2.5. Thanks, David.

Good idea and information berloga, probably that's why they're not shipping from www.fredericks.com to international destinies anymore (just Canada), they might be in the process of opening a new distribution/production center, perhaps in Europe.

On an interview with the CEO (you can find it somewhere on this thread, no time to look for it now), I heard that she had plans to expand internationally, and perhaps that will be the way.

As for the stock, perhaps the market needs some more information about Frederick's of Hollywood before moving MSI shares sharply higher, but I think risk is quite limited at current levels.

I'll keep holding MSI.

[David Randolph]

Nothing new on MSI, as the market is waiting for more information about Fredericks of Hollywood. The merger between Movie Star and Frederick's is expected to close over the second quarter, 2007, so between now and then, news will be out.

I'll patiently wait for those news as I keep on holding the stock.

[David Randolph]

Someone on Yahoo posted that earnings will be out next week for MSI and he's right. That's great, probably we'll hear more things about the merger with Frederick's of Hollywood and perhaps some more details about it on the conference call.

I'll continue holding MSI.

[David Randolph]

Nothing new on MSI yesterday, low volume and no news out. I'll continue holding MSI.

[David Randolph]

Investors are waiting for news or more information about Frederick's of Hollywood before pushing MSI shares higher than current levels. I'll also patiently wait for the news as I keep holding MSI.

[David Randolph]

MSI's consolidation/accumulation phase continues, roughly between $2.3 and $2.60. A close above $2.60 would be very bullish, even more so if it is above $2.75.

I have nothing to do with this stock but to check www.fredericks.com as we approach Valentine's day (the busiest season for Frederick's) and keep holding it.

[buddjas1]

Q2 FY07 10-Q filed.

http://www.sec.gov/Archives/edgar/data/93631/000095013607000861/file1.htm

$0.04 fully diluted net income per share on slightly lower q-to-q revenue and net income.  On the positive side, margins seem to be increasing and management foresees a better second half of the fiscal year because of a "strong open order position" of $25mm compared to $17mm last year.

No news on the merger, except for this tidbit: "Further, we are excited about the recently announced plan to merge with Frederick's of Hollywood. The combined company will have sales approaching $200,000,000, better efficiencies and a powerful brand portfolio."

http://biz.yahoo.com/bw/070213/20070213006424.html?.v=1

David, how does the $200mm revenue projection fit with your model?

[David Randolph]

Thanks for posting the news and making the right questions buddjas1

• Movie Star, Inc., Reports Fiscal 2007 Second-Quarter and First-Half Financial Results
Business Wire (Tue 4:21pm)

At yesterday's close of $2.53, MSI shares represent:

- 16,410,196 MSI shares outstanding*$2.53 = $41.518 M;
- 23.7 million new shares to be issued to Fredericks*$2.53 = $59.96 M;
- $20 M of rights

Sum it up and get $121.5 M, so the price to sales ratio of the combined company is just 0.61.

I've been focusing on Frederick's of Hollywood, but Movie Star also has been improving its own fundamentals as one can read on the press release.

We had the following special events affecting Q3 results:

«The fiscal 2007 second quarter included a $496,000 gain on the sale of property, plant and equipment and an $803,000 expense for merger related fees associated with the Company's previously announced merger with Frederick's of Hollywood. The Company recorded net income of $578,000, or $0.04 per diluted share, for the fiscal 2007 second quarter, as compared to $610,000, or $0.04 per diluted share, for the second quarter of fiscal 2006.»

Without these special events, net income would have been $578,000 + $803,000 - $496,000 = $885,000. If we multiply this number by four quarters, we get $3,540,000 in net income.

If we put the remote scenario that the merger between MSI and FOH isn't completed, we see that the current $2.53 share price represents a market cap of just 16,410,196 MSI shares outstanding*$2.53 = $41.518 M, so the estimated earnings multiple would then be $41.518 M/$3.54 M = 11.73.

MSI looks cheap. But it looks even more cheap when we put FOH into the picture, because I think FOH is worth much more than $80 M (the difference between the $121.5 M total value and the $41.518 M attributed to MSI alone). The company was taken private for $70 M in 1997, and that was before www.fredericks.com even existed.

As I said previously, I'm not willing to let go of MSI below $6 a share.

Let's see if yesterday's results and press release are enough of a catalyst for MSI to breakout above $2.60 and $2.75 resistance levels. I think so.

[buddjas1]

Is it not interesting that MSI's PR did not disclose more of FOH's financial information, except for revenue, which does not really matter?  Why would MSI not disclose FOH's numbers, if they were good, in order to make the mediocre FY07 Q2 numbers seem less important?

[David Randolph]

Is it not interesting that MSI's PR did not disclose more of FOH's financial information, except for revenue, which does not really matter?  Why would MSI not disclose FOH's numbers, if they were good, in order to make the mediocre FY07 Q2 numbers seem less important?

Do you think the numbers were mediocre? I think they were nice.

I guess they didn't disclose more information about FOH because they're not entitled to do it. It's not the time yet. But that was what the market was looking for, unfortunately it didn't even care to analyze MSI's numbers because the only thing that matters now is information about FOH.

As I see it, MSI shares are valuing FOH at less than $80 M, and that's way below what it should be.

My take is patience will reward MSI current shareholders like you and me.