Emerson Radio (MSN) is in the small appliance and electronic business. The company sources, designs, markets, and eventually sells these products to large retailers such as Target (TGT) and Wal-Mart (WMT), among others. The company’s product lines include compact refrigerators, wine coolers, microwaves, clock radios and other electronics including but not limited to televisions. The company doesn’t actually manufacture products, it contracts Chinese manufacturers to produce while the company just sells the completed products.
The company recently came to my attention while screening for profitable companies trading below book value. Emerson Radio has a $47M market cap, yet it’s sitting on $52M worth of cash. It’s trading at a miniscule 0.62 price to book value. The company is also profitable, recording a profit of $10.6M during its 2012 fiscal year. Why exactly is Emerson so cheap?