Firstly, we study AEM and its sales trends across the 4 product lines.
The sales trends for AEM across its product lines are detailed in this exhibit.
Also, AEM has been facing declining market share in a mature, slow growth industry.
The exhibits on sales trends and market shares over the last 3 years indicates that we have been losing sales steadily for the Direct Combines and Tractortronics product lines which are significant contributors to AEM’s topline and bottomline. The question that leads from here is what is causing sales of the Direct Combines product line to decline—new technology, new competitors, change in consumer demands, change in distribution channels or any other cause.
The industry has seen an emergence of a new technology in Direct Combines with John Drill leading the initiative. This has been the primary driver for change in consumer demands. We should not worry about Tractortronics since is a declining marketplace and its products are being replaced by Direct Combines.