Vacuum Cleaners Discussions

• Profits up 19 per cent to £115m
• Sales up 9 per cent to £514.7m
• R&D spend increased, up £20m to £70m

Based on your calculation you may be correct.  Problem is, we do not know the accuracy of your calculation.  Most likely it is not correct as usual.

Botom line is that I told you years ago that box sales are not as important as profits.  Even $32 profit is better than the losses suffered by your beloved Hoover.  Dyson really has put the spurs to you and Hoover.

Ride em cowboy.

Your first instinct is right [I highlightedit for you].  Go with it.  No maybe about it. 

Carmine D.

Here are the facts per DIB's Forbe's article: 

Net dyson profit for 2007: $64 Million

Gross annual sales: $1B

Units sold at wholesale in the USA per NPD [and confirmed by a dyson insider here]: 2 million.  Probably 3-4 Million in total worldwide.  Matt [Airblade] said he had not seen the actual numbers yet.

Do the math for yourself.  What do you get?

Carmine D.

Interesting article, which is very short on details:

The payout of $289 Million is a debt on the dyson Balance Sheet [read decrease in Assets; decrease in Capital [Retained Earnings] and increase in Liabilities.  That's not good for the dyson company IMHO.  The payout is not from dyson profits on operations.  The payout represents 450 percent more than the company's net profit for 2007 [$64 Million]. 

It raises questions:  Why is Mr. Dyson borrowing money from the company?  Did Mr. Dyson pay himself any compensation for 2007 from company earnings [Income Statement]?  Or, did he borrow from the company's assets [Balance Sheet] for his 2007 compensation?  The latter is not the normal course of business for paying yourself.  Even if you own the business.   

Dyson did it before the new UK capital gains laws go in effect [April 1].  I don't know the specifics of the laws.  My suspicion, based solely on the exigency of the dyson's Board action, is that the new laws do the following: (1)  Preclude private company owners [like Dyson] from making such huge payouts from the assets of their companies as compensation [as does the USA]; and/or (2) Tax the amounts borrowed for compensation at much higher rates [as does the US to discourage the financial practice].  Possibly both.

A side bar:  The article states that dyson appliances captured 20 percent of the US market share in 2005 and 30 percent in 2007?  If appliances is another way of saying "vacuums,' how did it arrive at the percentages?  NPD, the authoritative industry source, as told by Airblade, says dyson share is 9.5- 10 percent.    Did Mr. Dyson take the payout in the form of dyson vacuums?  That would explain it!

Carmine D.

Just a quick answer to your side bar..............Both numbers are correct.

9.5-10% is UNIT share

20-30% is DOLLAR share

Thanks Airblade.  You're right.

Carmine D.

Thanks DIB:

You're right, and that's probably true.  Mr. Dyson paid himself now for the future...at the expense of adding debt [increasing Liabilities, decreasing Capital, and decreasing Assets] on dyson's balance sheet.  Smart and good move for him.   Good for dyson?  BAd for dyson?  Especially in the current and future economic conditions.  Good financial practice?  Or shakey? 

That payout [$289 Million] is 450 times dyson 2007 net profits [$64 Million].  It will take dyson, based on 2007 results of operations, 4.5 years to recoup Mr. Dyson's future compensation.  In business, that's a long time with alot of future uncertainty. 

The UK CGIT went from 10 percent to 18 percent.  Very low by US standards.  Does the increase warrant a future payout of 450 times 2007 net profit?  By adding substantial debt to the Balance Sheet?  Apparently, the dyson Board thought so and passed approval quickly.  To allow Mr. Dyson to avoid paying the higher income taxes to the UK.  Wonder what his UK house is assessed for property tax purposes?

Carmine D.