In 1978 the Quick Brown Fox Typewriter Company had a historical earnings call. What follows is a real account of that fictional meeting.
CEO Rufus Wainwright: Good morning. Today, I will begin by sharing with you a brief summary of our last quarter’s business, and then we will open up the floor to your questions. Please make sure to raise your hands so we can see you clearly, and because this is 1978 and conference call and internet streaming technology are anachronistic.
This past quarter was a disappointing quarter, but we are pleased with the results. The team worked exhaustively in coming short of their desired results, but they are now more invigorated than ever.
As you know, September is our Christmas season. Large secretarial pools flood the market after long summers with their families, and so companies are in desperate need of our typewriters.
Earnings per share were up 12% over the prior year at $0.56/share, while sales for the last three months were down slightly, roughly 1.0%, in relation to the prior year. We attribute the former improvement to our stellar leadership and the latter decline to the unusually warm summer season and also to the release of Jaws II. The trepidation of going into the water from the film created a similar effect on people’s desire to return to work, and the nice summer weather only exacerbated this effect.
We are excited now to embark on our next season.
October also saw the launch of our proprietary Sensational User Experience 5000 — the SUX 5000, for short. The SUX 5000 offers our business customer the latest in front striking typewriter technology. From our studies, the words per minute achieved by the average secretary, using the SUX 5000, increased 20%. This increase is highly valued by our customers because it is a key productivity indicator. Over the years we have seen an incredibly high correlation in sales performance for our products in relation to this metric. The SUX 5000 is unrivaled in its speed and efficiency against any other current typewriter on the market. Early sales on the SUX 5000 are promising as well.
Of course, going forward, we will also continue to focus on innovation and streamlining our cost base in order to maintain our competitive effectiveness within these challenging times. Today we are happy to announce our “You Inked It” loyalty program, whereby for an annual fee, our customers not only receive discounted rates on all typewriter servicing, but they also receive a free ream of paper for every typewriter they buy. This loyalty program is #1 in our industry. You just can’t beat a free ream.
In addition, we have a number of other new initiatives in our pipeline. The most exciting of which is our typewriter combo storage device. Customers tell us that storing copies of their typewritten documents continues be a challenge, requiring filing cabinets, folders, etc. So our engineers have designed an innovative solution that puts a typewriter right on top of a 3-foot filing cabinet. We call this the typing cabinet. Early tests indicate that customers really understand the intent of our design, so we are thrilled with the potential in this product and plan to get it into the market as fast as possible. It just makes so much sense conceptually right out of the gate.
To this point, we are also working hard to streamline our efforts. We want our innovation priorities to grow out of our already successful typewriter business, which has been in operation for over 100 years. We believe that this track record of success is a great foundation upon which to build, and so we have canceled initiatives around video display modules, portability, and floppy disk storage, and instead will redouble our efforts in white out technology, keyboard layout design, and tab efficiency.
Remember, people, I have been in this industry a long time. Typewriters are here to stay. If typewriters had not been invented already, some smart kids out in their garage in California would be chomping at the bit to invent them today.
That concludes our prepared portion of our call today. We will now open up the floor for questions.
Analyst from Lehman Brothers: It appears that computers are gaining traction in offices and have the potential to replace typewriters as the primary go to device in the workplace. How are you thinking about the coming digital age?
CEO Wainwright: That is a great question. Anthony, is happy to speak to our digital strategy.
Chief Engineer Anthony Fusco: Look, before I answer that question, what you have to understand is that computers are a very small portion of the market right now. Customers still vastly prefer to use a typewriter. It is what they know. It is what they are trained on. It is what they put their cigarette ashtrays next to.
Our efforts around digital center around a desire to use it to improve our current product line only. Our product lines have and will continue to be the best in the industry. So we are looking at digital where it makes sense for us — readouts that complement the user experience of ink on a page, thermal printing, etc. Things like that. The research and development costs of efforts outside of this approach do not make sense for us.
Analyst from Credit Suisse: You mentioned that the SUX 5000 is off to a great start. Can you give us more insight into its performance? I don’t really care about your answer. I just need a starting point for sensitivity analysis in my models.
CEO Wainwright: The SUX 5000 is performing well against our benchmark of the category of products it replaced. It is up nearly 15% over this benchmark since its introduction.
This performance indicator likely would have been higher too had it not been for Jaws II and the intense summer heat, as we said before.
Analyst from Goldman Sachs: Over the long-term what do you believe will be key to your continued success?
CEO Wainwright: We play to win. If you don’t play to win, you shouldn’t be in the game. And, you can’t win if you are broadly focused.
So #1 — we are narrowing our scope and limiting our priorities. If it isn’t about making our typewriters better, we aren’t going to do it. It is that simple.
#2 — we are taking a holistic approach in everything we do. We look at everything from a 360 degree point of view. Our typewriters have to be designed for our end customer in mind. For years customers have told us what they want, and we will continue to design to what they tell us about our machines from our market research. We have a holistic understanding of our customers’ relationships with us, whether at work or in the home, and we will continue to exploit this understanding to be a leader in the typewriter market for years to come.
Thank you. That is all the time we have today. This concludes our earnings call together.
First Recorded November 1, 1978
Be careful out there,
P.S. If you liked this post, then you might also like 10 Signs from an Earnings Call that a Retailer is in Trouble.
P.P.S. Thank you to everyone for continuing to like, share, and retweet these posts each week. I especially want to thank Andy Feierfeil, Heather Foote, Chris Weaver, Neil Thomas, Talon Rindels, Kevin Iverson, Rene Saroukhanoff, Wendy Schaffler, Ben Schein, Justin Grant, Nick Ghitelman — you guys rock! Thanks for continuing to inspire me.
P.P.P.S. I don’t usually like to get political with Omni Talk, but today I feel the need to speak up on one important issue. An issue that has gone on for far too long. The issue I am talking about is Rug on Rug crime.
Rug on Rug crime is an atrocity. It must be stopped. Here is an example of Rug on Rug crime in your area:
It seems innocuous at first. You think, “Sure why not throw a yellow area rug, on top of my beige carpet in my bedroom?”
DON’T DO IT! IT IS JUST WRONG!!
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Only you can prevent Rug on Rug crime. Do what you can to stop its spread today!