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Hello Readers,
Back in May, we said that the summer market direction would be decided by what the Fed did in June, and that’s what happened. And, it has been ugly. Our Current Portfolio has taken its worst drubbing since the corporate scandals back in 2002. It is pretty safe to say that what the Fed does next week will dictate the market’s action well into the Fall; of course, so will oil prices. During the last week of July, we had a nice upswing because the gurus think the Fed will do nothing. It’s nail-biting time.
Here are the headlines since the last Newsletter about companies in our Current Portfolio. Dates in parentheses are when we first recommended them.
Microvision (MVIS) (7/20/06). Sets earnings call for August 3. Inks development deal with a laser supplier.
Advanced Life Sciences (ADLS) (7/20/06). Earnings call slated for August 9.
Point Therapeutics (POTP) (7/5/06). Will present at RedChip Small Cap confab August 15–16.
BSQUARE (BSQR) (6/20/06). To distribute hardware and software products through Arrow development tool’s program.
Curis (CRIS) (6/5/05). Quarterly results look upbeat; balance sheet still appears healthy.
Micro Linear (MLIN) (6/5/06). Reports net income for 2nd QT; balance still looks good.
ICAD (ICAD) (5/20/06). Recent numbers not great; balance sheet still so-so, but stock price has remained stable.
02Diesel (OTD) (5/20/06). Announces New CityHome program participant, Dakota Trailways. Company meets AMEX listing requirements.
Kintera (KNTA) (5/5/06). Big Brother Big Sisters of America and eight pilot agencies launch new web sites leveraging Kintera software. Signs $10.1 million in new contracts during the last quarter.
ClickSoftware (CKSW) (4/5/06). Reports record revenues for the 2nd QT and increases guidance for annual revenue growth; balance sheet still looks good.
Cytogen (CYTO) (3/20/06). Initiates Phase III study of cancer drug. Slates August 7 for earnings release.
The Inventure Group (SNAK) (3/5/06). Quarterly results not great; balance sheet still appears to be pretty good. Names new CFO.
Lipid Sciences (LIPD) (2/20/06). Says procedures were well tolerated by first patient in human clinical trial.
Gateway (GTW) (2/5/06). The usual slew of news releases about products. Stock took a hit when it was removed from the S&P 500. Hedge fund takes a 6.6% stake in the company.
8×8 (EGHT) (1/20/06). Recent quarterly numbers show big losses although revenue growth looks good; balance sheet still looks decent. Names new CFO. Stock price needs to get back over a dollar real fast or NASDAQ could give the company a de-listing warning.
Ceragon Networks (CRNT) (1/5/06). Good revenue numbers give stock a lift; balance sheet still looks good. Gets wireless deal from Australia’s Optus.
Castelle (CSTL) (1/5/06). Releases market’s first network fax server appliance with full hardware redundancy. Revenue numbers drop as does stock price; balance sheet still seems okay.
Digital Angel (DOC) (12/20/05). To release 2nd QT results on August 3. UK subsidiary receives $350,000 add-on order from UK Ministry of Defense.
Fusion Telecom (FSN) (12/5/05). Adds additional 150,000 subscribers in less than two weeks.
Memory Pharma (MEMY) (11/5/05). Reaches milestone under Nicotinic Alpha-7 collaboration with Roche.
Westell (WSTL) (10/20/05). Although revenues were down, company had 17th quarter of profitability; balance sheet still appears to be very strong.
Discovery Partners (DPII) (10/5/05). August 1 set as record date for share holders eligible to vote on merger.
Nephros (NEP) (9/20/05). Receives non-compliance notice from AMEX; company must submit plan by August 17.
EntreMed (ENMD) (9/5/05). Forms scientific advisory board, which usually means little.
N.A. Scientific (NASI) (8/5/05). Gets FDA okay for clearance to sell nomosSTAT.
Innodata (INOD) (7/5/05). Slates earnings call for August 9.
Advanics Pharma (12/20/04). Earnings call set for August 2. Announces launch of Kelfex 750mg capsules.
Applied Micro Circuits (AMCC) (11/20/04). Sets earnings release for August 3. Special shareholders meeting moved back to August 25. Expands dual CDR portfolio for 10Gbps XFP module applications.
Nova Measuring (NVMI) (11/5/04). Sets earnings news for August 3.
Aviza (AVZA) (10/5/04). Earnings call scheduled for August 10. To present at confab August 8. Celsior ALD system wins award.
Chordiant (CHRD) (9/20/04). SEC contacts company about stock option grants, which seems to be that agency’s latest bugaboo. Sets earnings release for August 8.
Network Engines (NENG) (6/5/04). Recent earnings news looks good; balance sheet still appears strong. Partners with Kapersky Lab to bring proactive protection against malware to the NS9200 series.
TMNG Global (TMNG) (4/20/04). Acquires certain U.S. assets of Advantis Corp. Schedules earnings release for August 8.
Socket Communications (SCKT) (3/20/04). To present at investor confab on August 7. Reports record revenue number for the 2nd QT, but slight losses may dampen stock movement; balance sheet still seems okay.
OpenTV (OPTV) (3/20/04). Earnings call slated for August 9. Extends integrated browser services for CE manufacturers.
AVANT Immuno (AVAN) (12/5/03). Earnings call scheduled for August 2.
Insmed (INSM) (11/5/03). Signs development agreement with Phyton Biotech. Quarterly results due August 8.
Monogram Biosciences (MGRM) (7/20/01). Quarterly report reads well; balance sheet still seems fair. Announces allowance of U.S. patent related to eTag technology.
Q Comm (QMM) (3/5/06). To announce 2nd QT results on August 14.
Our picks for this Newsletter are two NASDAQ-traded technology companies.
RIT TECHNOLOGIES, LTD. (NASDAQ: RITT) – $1.10. Twelve-month hi-low has been $4.40 – 97 cents. Located in Tel Aviv, Israel, with about 140 employees, this small tech has 14.6 million shares outstanding, $18.19 million in total current assets, $20.73 million in total assets, and $9.24 million in total liabilities. Institutional ownership is around 18%. One analyst has the stock as a “hold”. http://www.rittech.com
Here we go again as we add yet another Israeli company to the Current Portfolio, even though our last few of these are still pretty stagnant. However, if RiT Technologies, Ltd. is like most of our past Israeli stock picks, we’ll be happy. The stock seems cheap at these levels. Is it the war factor?
Found in 1989, and public since 1997, RiT Technologies boasts that it is a leading provider of physical network infrastructure control and management solutions. The company’s main solutions are: PatchView is an intelligent physical layer network management system for enterprises, which provides real-time information on the status of connections between equipment in the network, reports various connectivity changes to the network management system, and guides the system administrator in planning and developing changes. SMART Cabling System is a structured cabling system comprising a collection of patch panels, communications outlets, cables, patch cords, and complementary products to provide the end to end connectivity for commercial buildings. PairView is a outside plant management and qualification system, which enables telephone companies to identify, record, and test the connectivity routing of local loop repairs and updating the telephone companies database,
RiT also offers PairQ, which allows transfer of high bandwidth communication on old telephony lines; PairViewPro, a local loop mass verification system that can identify and map various digital services carried on a line; and PatchView for the Enterprise network management software. Some of the company’s strategic partners include the Panduit Corp., Brand-Rex, Ltd.,ADC, and Belden/CDT.
In June, RITT made available what it calls the industry’s most intelligent automated provisioning tool to help network personnel keep pace with the mobile workforce and rapidly growing datacenters. And, at the beginning of May, the company launched its fourth generation PairView Sharp process management decision support solution.
For FY2005, ending 12/31/05, revenue was $27.85 million with $1.4 million in net income. During the first six months of FY2006, ending 6/30/06, revenues were $11.91 million with $1.47 million in losses.
So far for this FY, RITT has had some reversals in fortune, however, the company appears to be keeping its technology updated, which should bode well for the future.
Our 24-month target for the stock is $2.00 to $2.25.
For more information, contact RITT’s Simona Green at +972-3-766-4249 (in Israel); simonag@rit.co.il
AMERICAN TECHNOLOGY CORPORATION (NASDAQ: ATCO) – $2.15. Twelve-month hi-low has been $6.75 – $2.09. Based in San Diego, CA, with about 45 employees, this electronics maker has 24.5 million shares outstanding, $9.2 million in total current assets, $11.33 million in total assets, and $3.61 million in total liabilities. Institutional ownership is around 19%. http://www.atcsd.com
While we would like to see the balance sheet a little stronger, we are adding American Technology Corporation to the Current Portfolio because it has recently released some new technology, and it appears to be carving a nice niche for itself in the military and law enforcement markets.
Founded in 1980, and public for nearly ten years, American Technology bills itself as a leading innovator of directed sound products and technologies. The company offers various product platforms and technologies including HyperSonic Sound, Long Range Acoustic Device, NeoPlanner, and Sound Vector. Its HyperSonic sound technology is a parametric speaker technology that creates sound in the air using ultrasonic frequencies above the normal range of hearing. The Long Range Acoustic Device technology produces variable intensity acoustical sound for use in long-range delivery of directional sound information. ATCO’s NeoPlanner is a thin film magnetic speaker that produces sound of low distortion and high volume. The SoundVector is a directional sound technology for replacing sound pollution generating omni-directional alarm signals, sirens, hazard signals, and other directed warnings or tones.
In total, American Technology has around 320 U.S. and worldwide patents. Some of its customers include the U.S. Army, Navy, Marines, local police departments, cruise lines, commercial maritime vessels, the U.S. Border Patrol, and the National Guard. Over a year ago, ATCO entered into agreements with In-Store Broadcasting Network (IBN) and ECCO Group, which should bolster its growth down the road.
A few weeks ago, ATCO received its largest LRAD 500 order to date. This system, ordered by a military customer, has the capability of emitting powerful warning tones in a 15 to 30 degree beam in excess of 500 meters. In June, the company introduced its new directional sound system, the HSS Model H-460.
For the FY ending 9/30/05, revenue was $10.19 million with $9.1 million in losses. During the first six months of the current FY, ending 3/31/06, revenue was $3.36 million with $3.4 million in losses. At the end of June, ATCO said that 3rdQT revenue will be around $3 million and expects similar results in the fourth quarter. The company says it has resolved parts and maintenance issues and is now shipping orders from its $7 million backlog.
ATCO appears to be highly dependent on government orders, and, at times, that can be a bad thing. But, given the current climate, it looks like it could be a good thing for ATCO.
Our 24-month target for the stock is $3.75 to $4.00.
For more information, call ATCO at 858-676-0519; ir@atcsd.com
Look for the August 20, 2005 Newsletter to be posted on 8/16 or 8/17.
Thank you,
George