IFON Huge Research Report! by Bull & Bear’s Digest
Page 8 BULL & BEAR Stocks to Watch Bull & Bear’s Digest of Investment Newsletters THE BOWSER REPORT, PO BOX 5156, Wil - liamsburg, VA 23188. Monthly, 1 year, $64 (print) or $74 (both print and online). www.thebowserreport.com . Verykool smartphones by InfoSonics
Thomas Rice: “In a world where cell phones are becoming increasingly more popular, InfoSonics Corp. (IFON) provides wireless handsets, tablets and accessories.
In 2013, 1.8 billion devices were shipped (a 4.8% increase over 2012). And, DigiTimes Research expects this upward trend to continue, especially in the smartphone segment, which is expected to grow 24% in 2014.
InfoSonics has a small niche in the mobile phone universe, but has continued to grow despite the vast competition. In 2006, the company introduced verykool® , a brand of entry-level, mid-tier and high- end feature phones and Android-based smartphones. Since shutting down the distribution of third party products, including Samsung sales in Argentina, IFON has focused entirely on growing its verykool line. InfoSonics announced an in-house design center in China in 2010 to compliment the design work done by independent design houses and original design manufacturers. Currently, the company focuses on the development of feature phones, providing basic mobile features, and smartphones, running on mobile operating systems and offering many features. While smartphone growth is racing upward, accounting for 55% of the mobile shipments in 2013, feature phones are still in demand because of the higher costs associated with smartphones. Operating for the most part in Latin America, InfoSonic’s largest customer base is quite price sensitive. As a result, the company is expanding its portfolio of affordable smartphones, replacing some of its high-priced featured phones with low-priced smartphones. Beyond Latin America, the company is growing its market share elsewhere in the world. Over the past few years, the company has shipped products to Western Europe, Russia, Singapore and other Southeast Asian Countries and Africa.
Through a December 2013 distribution agreement with Ingram Micro Mobility, IFON hopes to grow its U.S. sales. According to InfoSonic’s second quarter financial report, efforts to expand geographically are succeeding from a revenue standpoint.
For the six months ended June 30, 2014, revenues from South America were up 112%, Mexico, 249%, Europe, Middle East and Africa 7,441% and Asia Pacific, 367%. In fact, over the six month period, only revenues from Central America were down, falling just 9%. As IFON continues designing new products, replacing higher end feature phones, and expanding geographically, the company’s market share should continue to grow, especially in areas where price sensitivity is high. Financials Financially, InfoSonics is in good standing. After shutting down third part distribution, InfoSonics’ revenue dropped considerably. However, with the focus on growing its own brand, the company’s revenues have grown 9% from fiscal 2011 to fiscal 2013. And, for the first six months of 2014, sales were up 37% year-over-year.
In addition to sales growth, IFON’s second quarter 2014 marked its fourth consecutive quarter of profitability. For the three month period ended June 30, 2014, the company posted a $109,000 profit compared to a $47,000 loss in the same period of 2013. On its balance sheet, InfoSonics has a high total current assets-to-liabilities ratio of 4.6-to-1, and $16.5 million in working capital. Plus, the company operates with no long-term debt.
Management Joseph Ram founded InfoSonics in 1994 and currently sits as the company’s president and chief executive officer. He owns a substantial 30% (4,348,750) of the company’s common stock. Altogether, officers and directors of the company own 31.5% (4,672,850) of the company’s shares. Vernon A. LoForti is the second largest insider shareholder, with 1.3% (192,500) of IFON’s shares. Bottom Line In a competitive mobile phone landscape, InfoSonics has found a way to increase sales and market share by offering both quality feature and smartphones, ranging in price from $18.99 to $249.91 (according to the company’s website). By continuing to evolve its product offering and expand its geographical presence, InfoSonics can bolster its share price. IFON shares are currently trading at less than half of the company’s 52-week high.
Office: 3636 Nobel Dr. Ste. 325, San Diego, CA 92122, Tel: 858/373-1600, Fax: 858/373-1503, www.infosonics.com.”
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