Osim anounced its FY 2006 earnings results last night and truthfully, it was quite impressive. It reported rise in sales although its net profit dipped. Its business still made money from operations but not as much as last year, and they are paying higher dividends.

Not too bad for a company that had recently recalled its uZap MINI because it was a potential fire hazard.

It also issued a profit guidance on 31 January partially because of losses resulting from OSIM Brookstone's interest expenses.

About a year ago, we asked CEO Ron Sim if he regretted buying Brookstone. The answer was no. He mentioned that Brookstone is usually only profitable in Q4 because of the Christmas shopping season and that would be enough to turn the rest of the year around.

However, the word around is that Brookstone is not selling as much as Osim expected.

When Sim was appointed to Brookstone's board of directors, he replaced then CEO Michael Anthony with Lou Mancini because he felt Anthony wasn't performing up to par. Sim said he intended to improve how Brookstone did in Q1-Q3 and have it less dependent on Christmas sales. That said, no significant improvements have arisen out of this change in management.

Our American colleague says that during Christmas, the shopping crowd that frequents Brookstone is less likely to buy Osim's massage chairs or big ticket items than use them to soothe their muscles on the spot to prep them for more shopping.

So is Brookstone capable of turning profitable in this coming quarter? We think not.

And we wonder what Sim would say now if we asked him the same question we did a year back.


Nurwidya Abdul and Serene Lim