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Maker of HDTVs Aims for Big Time

Syntax-Brillian tries to build buzz for its Olevia brand while staking out both ends of the market.

September 03, 2006|Evelyn Iritani | Times Staff Writer

High in the Hollywood Hills, Leonardo DiCaprio, Ione Skye and Jennifer Tilly sipped drinks and played poker a few days before the Emmys.

The actors were gathered at a $10-million mansion to raise money for charity. But they were also lending their star appeal to Olevia.

Olevia, a little-known brand of high-definition television sets, could benefit from the celebrity interest. During the next several months, its maker, Syntax-Brillian Corp. of Tempe, Ariz., hopes to raise the brand's profile by getting the name in front of the entertainment industry executives and sports fans who drive HDTV sales.

To help build buzz among trendsetters, Olevia televisions have been appearing at invitation-only Hollywood parties and sporting events. Two 65-inch Olevia models flanked an entrance to the Shrine Auditorium during last week's Emmy Awards, and several dozen giant flat-screen TVs were mounted on the walls. And the company is launching a $10-million ad campaign aimed at the 97 million Americans who tap into ESPN each week.

The publicity blitz is a high-stakes gamble for Syntax-Brillian, which is trying to morph from a provider of low-cost TVs into a global electronics giant capable of challenging such companies as Sony Corp. and JVC for a share of the fast-growing HDTV market.

The transition from analog to digital broadcasting has triggered a surge in demand for TVs capable of providing the highest-quality picture.

Sales of HDTV sets are expected to reach $37 billion in 2010, up from an estimated $24 billion this year, according to DisplaySearch, an industry research firm based in Texas.

Syntax-Brillian's story demonstrates how technology, lower trade barriers and more sophisticated supply networks have made it possible for a small, well-connected operation to build itself into a global player in a relatively short period.

Today, all of Olevia's televisions are manufactured in Taiwan. But in 2007, the company plans to start making Olevias in China under contracts with a number of Chinese television companies. And next month, Solar Link Technologies, a subsidiary of Taiwan's giant Pro Chen Group, is to begin assembling TVs for the U.S. market at a facility in Southern California's Inland Empire.

Syntax-Brillian Chairman and Chief Executive Vincent Sollitto said that by building its largest TVs in California and shifting production of higher-cost components to China, the company can keep costs down while preserving a red, white and blue image.

Labor costs are three times higher in the U.S. than Mexico, where most big-name TV brands are assembled for the U.S. market. But by establishing some production in the U.S., Sollitto said, he can reduce shipping and procurement costs, while keeping better control over quality. He also eliminated the duties he had been paying on TVs imported from Taiwan.

U.S. consumers don't appear to care where their electronics come from. But Sollitto said the assembled-in-America label would have a big appeal in Hong Kong and China, where American brands have a reputation for quality.

"I'm not sure it will help us here," he said. "But it will certainly help us in China."

Syntax-Brillian's stock took a hit last week, after the Nasdaq-listed company projected revenue of $65 million to $75 million for the current quarter fell short of analysts' expectations. The company reported a net loss of $5.5 million on revenue of $59.8 million for its fiscal fourth quarter, which ended June 30.

But Michael Tieu, a China analyst with investment bank Brean Murray, Carret & Co., thinks Syntax-Brillian's management has made some smart moves, forging alliances with powerful Taiwanese and Chinese electronics giants that can provide a low-cost manufacturing network and entry into China, which is expected to be one of the world's biggest HDTV markets.

"A lot of people have given up on Syntax-Brillian," said Tieu, who has a "strong buy" rating on the stock. "I think they're going to be proven wrong."

Syntax-Brillian was the product of a 2005 combination of privately held Syntax Groups Corp. and publicly held Brillian Corp. At the time, Syntax was one of the top-10 sellers of flat-screen TVs in the U.S., thanks to an aggressive Internet strategy focused on low prices and high volumes. Brillian produced $8,000 rear-projection televisions employing liquid crystal on silicon, or LCoS, technology.

A battle is underway in the big-screen television market between flat-panel models -- with liquid crystal displays or plasma screens -- and rear-projection televisions that rely on reflective technology such as LCoS. For larger screens, that technology offers a superior quality picture at a lower cost, which is why it is preferred by many videophiles.

Sony and JVC produce rear-projection televisions using LCoS technology. But mass producing the quarter-sized chips, or imagers, used in those units has been difficult, and a number of companies, including Royal Philips Electronics and Toshiba Corp., have pulled out of the market.

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