Daktronics’ HD Displays Score Fans, Not Investors

Mar 6, 2008  •  Post A Comment

The Kansas City Royals probably like what they see from Daktronics. Investors, not so much.
Next month, the Major League Baseball team’s Kaufman Stadium will unveil CrownVision, billed by manufacturer Daktronics as the world’s largest high-definition scoreboard, at its home opener against the New York Yankees. The scoreboard is 100 feet by 85 feet, or the equivalent of about 1,600 34-inch HD televisions—only about eight times more expensive.
With recently announced plans to build a network of HD scoreboards for both Yankee Stadium and the New York Mets’ Citi Field next year, Brookings, S.D.-based Daktronics will have supplied scoreboards for 26 of the 30 MLB teams.
Investors have not been impressed, however. The stock has lost about half its value since early October, compared with about a 20% drop for the Nasdaq. Investors have feared that because costs have risen faster than sales, a downturn in the economy could put a dent in earnings, said Noble Financial Group’s Michael Friedman in a note to clients last month.
Company sales have benefited as sports franchises and major universities that are either replacing or upgrading stadiums spend between $10 million and $15 million on Daktronics’ jumbo HD scoreboards, which range from about 4,500 square feet to Kansas City’s 8,500 square feet.
Last month, the company said revenue for the quarter ended Jan. 26 rose 11% to $118.2 million after the company received orders for three new HD scoreboards, including those for the New York teams. Daktronics’ earnings of 13 cents a share beat the 11-cent estimate by analysts in a Thomson Financial survey. This week, Daktronics said the University of Minnesota has ordered a 108-foot-by-48-foot scoreboard for its TCF Bank Stadium, which hosts its first football game in September 2009.
A continuation in such orders—likely as more teams renovate stadiums—may jumpstart earnings, Friedman said.
“Daktronics’ leading electronic display manufacturing capabilities along with the trend toward upgraded sports stadiums and digital advertising will help the company grow its revenues,” Mr. Friedman said. “We do not anticipate a dramatic slowdown in electronic displays as a result of an economic slowdown during the next two years.”


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