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SCKT...United Van Line contract...some interesting info
Inventory sales have been going well (July was as strong as June for scanners, Somos ok. August so far has scanners doing well again, but Somos doing really well). Overall, though, I haven't seen enough 7ci units going out of Ingram Micro to show that many of the agents from United Van Lines are ordering yet (all of the order is supposed to go through this distributor).
I did some research today and found a job posting (closing July 12th) that had UVL advertising for a 6-8 month position for IT/software person to aid in the integration of an entire software/network system into UVL and Mayflower to interconnect all the hundreds of agents. Part of the description of duties involves preparing new tablets for use with the inventory programs for package management and coordinating training sessions on how to use them and then download that info into the main network to share with other agents. (This way one agent can load a truck with tablet/scanner, download it into the main corporate network and the agent on the other side of the company has it already so they can unload the truck with their same tablet/scanner/software).
The fact that the job advertisement included both United Van Lines and Mayflower Moving means we are dealing with 7000+ trucks and 600-700 independent agents or so for certain. The fact that headquarters had a closing date of July 12th means the integration of all of this is progressing, but it still is in the initial stages. In time, if the whole company integrates the MobileMover software into their trucks (as indicated. Also, this software ONLY uses the Socket scanner), then it could end up boosting sales nicely. The fact that the position they are hiring for is only a 6-8 month spot means that it should play out before the end of the year (perhaps into Q1 a little) as was said by Kevin during the cc call. Barring something happening, it means it really is coming. Each scanner is around $200 to Socket so you do the math. If they got the Japanese order, 4th Q could really be a breakout Q.
bbotcs...SCKT....
It's going to work out. They post about new partners on their Twitter page all the time. They just got another reseller in Japan. International POS systems are building. It just needs some more time.
I e-mailed the CFO about the new 8ci scanner. They had 20 partners beta test it. The final design and software is set and it's starting production. They intend to send out the first 50 to existing app partners who signed up for it who are looking to integrate it into their product/software offering. I assume this is why the CEO said in the cc call that they figure the acceptance of this new product will be only a couple of months (vs 6-8 months for most new products that customers want to demo extensively). The scanner is really the exact same unit as the 7ci just in different packaging and integrates to the smartphone vs tablets. The units should start being available at distributors in early September.
7 series scanners are growing + large 7ci deals are imminent + the Somo will grow slowly + 8ci will add into mix + low expenses + low float + large tax loss carry forward = a winner in the end. It's been frustrating and painful but it will get there. Once it starts, then it'll be interesting to see how far it goes.
SCKT: Forbes Article: Mobile POS Will Surpass $2 Billion in 2013, iPad as Cash Register
Excerpts from Aug 2nd article: "The Mobile POS market will surpass $2 Billion in hardware/software sales in North America this year.
Clarification: This data is not consumer point of sales transaction value, but sales of POS equipment hardware and software.
Overall, mobile in retail is now a $5.7 Billion business worldwide and continues to grow rapidly. It is the single fastest moving trend in retail since Internet was added to the stores, according to IHL Group."
Socket doesn't need to become highly successful in this emerging market for shareholders to be rewarded. Who we kidding, even I will admit that I'm not sure management knows what the word "successful" even means anymore. The just need to be marginal at best for the stock to do well. Seriously. Right now the mobile industry is just starting (probably the 2nd inning of a double header) and Socket did $4.4M last quarter. If they grow the 7 series and Somo business just 20% from here (from $4.4M to $5.3M. Scanners have grown 80% from 4th Q last year already), and they get the 8 series scanners going to the tune of $1M/qtr (at the Shareholder Meeting they thought this product may be their #1 seller in the company), then at 41% profit margin + allow expenses to only go up a little (to say $1.85M/qtr) and that's $700K+ in net income. Divide that by outstanding shares and the stock price is a heck of a lot higher than it is today (by many multiples).
What if Socket was highly successful in this emerging market??? Remember, this is still Socket Mobile. Let's look at the other end of the spectrum. Worst case scenario is they are marginal at best and shareholders (at least ones at the current price vs real long term holders) will be rewarded nicely going forward. The 8 series scanner, the continuing addition of new partners for the 7 series and Somo, and low expenses PLUS some more time to let it play out is all that's needed
SCKT: Update on partner NCR Silver update from NCR cc call for 2Q
Part of all my projections in the past were based on NCR contributing heavily to scanner sales for Socket. I always wondered what had happened here----did customers just not integrate the scanner into their hardware?? (NCR Silver only uses the Socket scanner). Here's an update on NCR Silver from NCR's 2Q cc call:
As of right now, they only have 2000 customers, obviously way less than they had expected. (If I remember right, the estimate given during the Investor Presentation Day in June 2012 was for 50-100K for the whole of 2013.) This pretty much means that all the growth in scanner sales that Socket has exhibited have come from other partners and not NCR. The CEO did say that building up NCR Silver is the #1 focus for the company as they want to lock up small businesses with their platform before they permanently lose them to the competition. The process has been a learning experience and a lot of work has gone into the infrastructure behind the product but now is finally going to start to focus more on the sales aspect. In this regard he highlighted their distribution partnership with Vantiv (VNTV, $3.6B NYSE company), one of the largest payment processors in the industry (they are creating Vantiv Mobile Checkout that is powered by NCR Silver. The agreement was signed in mid May 2013). The CEO also said to look here soon for some other large distribution partnerships that will be coming and that they expect significant growth mid to long term for the platform. It was obvious from the CEO's additional comments that they don't want to miss out on the millions of small businesses that can be targeted here. If they start to perform, it'd be some nice incremental revenue for Socket going forward on top of the already expected growth.
Hweb2...SCKT...
To put the new product into perspective, if you research Linea Pro (which is a barcode scanner and credit card processor attachment sled for smartphones), they have sold 250K of them (at over $600 each) in the last 3 years. I wish the CEO was more optimistic in his tone on the cc call concerning the potential market here for the 8ci (he was during the Shareholder's Meeting. I'm sure he's tired of the criticism that is sent his way). The company believes the smartphone barcode market is bigger than the tablet one that the 7 series scanners is going after. I'm sure he's hesitant to put his neck out anymore.
A few things from the CFO in reply to my e-mail after the cc call:
---75% of cordless scanner sales were from N.A. That's $1.95M. I actually tracked $1.6M and then bump it up from that with accessories and error in missing sales in tracking. My estimate was $1.9M for N.A. so I got that right. For scanners in July, the first two weeks were the best 2 I've ever seen, but last week mellowed out. It will be interesting to see how it goes as the summer weeks go by.
---Look for the 2d version of the 8 series scanner, called the 8xi, to be put out around the end of the year.
---The medical supply company that is using the Somo 655 in trial tests has indicated they will be back buying again in 4th Q and beyond.
I will re-emphasize the positives: Low expenses. I'm stunned at how low they are keeping them. Once the $550K loan is paid back, that's another $120K that can be taken off even more. It tells me that if this company is aggressive, it could go the whole year of 2014 with expenses under $2M/qtr even if they have to hire more people for growth. This is very important imo.
---growth is coming. The partners and industry for mobile will make it happen. From cc call transcript: "We have trials going on, I mean last quarter we sold, I forgot what the exact number is but approximately 12,000 scanners. We didn’t sell more than 300 to any one customer. So, believe me there is a lot of trialing going on right now and across many, many different areas.
So, there was no significant deployment in Q2, we’re expecting a few in Q3 but the timing of these are not really under our control."
I can understand the CEO not tooting the horn about the United Van Line, Japanese, or any of the other deals. He doesn't know when they will go through. But remember this-----all of these deals have software partners who are the main closers, not Socket. We don't need this tiny company to close the deals, they just need to wait for the bigger more powerful partners to do it and then supply scanners. Ex. Japan deal isn't about Socket, it's about Fujitsu.
3rd Q estimates: I can see sequential cordless 7 series growth. Broad based sales went from $1.8M to $2.6M (without Japanese trial order). Say it only goes to $2.8M due to summer duldrums. I see Somo though going in reverse though (without the medical supplier buying while they do trials on it), probably down to $1.3M. I see service/oem at $300K. New 8 scanner series is $100K. That's $4.5M. So I would say flat for quarter, but net income positive still.
4th Q estimate: Again, continued day-to-day sequential cordless 7 series growth will happen (the partners are only growing more and more and bigger and bigger, so we will say $3M to be conservative. Somo rebounds with the medical supply company buying again to $1.6M. Service/Oem of $$300K. New 8 series scanner product starts to kick in and does $500K. That's $5.4M right there. Add in any large deal on top of that. United Van Lines could add in $800K?? Japan $500K-$1.5M?? other deals?? I'd put it at $6M with almost a certainty. At 41% profit margin, and expenses under $1.9M (and no taxes), that over 10 cents/share (cause you know the stock will be under $3 so the outstanding shares will be 4.8M only). In the future, as the 8 series builds in revenue, it will replace the Somo for $$ per quarter.
The real negative here is the Somo SUCKS! But the new 8 series scanner, continued growth in the 7 series, and low expenses are the future here anyways. I personally would like them to bundle the Somo up next year and sell the whole division for some $$ and just focus on the scanners as the future.
To me, if you read the cc call carefully, it was very bullish even if the quarterly report wasn't. The CEO though is not a great speaker and has been criticized so much in the past that I think he's tired of making predictions. I'm sure he looks forward to the day the numbers do the talking for him.
Hweb2....SCKT...I'd estimated $4.6-4.7M but I assumed that OEM/Service was coming in at $500K as they said on the last cc call (as a new OEM customer was ordering). It ended up at $300K and that was where my estimate missed for the most part (that and I thought the Somo unit would do $1.6M).
Negatives first: Obviously $4.4M doesn't excite anyone. It sure didn't get me smiling. Yes, you can back out the $600K Japanese order that boosted 1rst Q numbers and say that cordless scanners then grew from $1.8M in broad based orders to $2.6M but that's a between the lines type of thing. I want strong sequential growth quarter to quarter no matter what and this doesn't cut it.
3rd Q doesn't sound exciting either. Europe is always hard for sales in the summer.
Positives:
Expenses. Even with all employees back and full salaries, expenses only went up 5%. 3rd Q may even be less. Right now this is what's keeping them net income positive. If they maintain these levels going forward then a lot of money will flow to the bottom line. They could keep expenses below $2M for a long time potentially.
4th Q. United Van Line contract is 5K or so that needs to be purchased before the end of the year. I can track this order through Ingram Micro easily. Very little has happened so if it hits a lot in the 4th Q, then it will add up. 4th Q should also get the Japanese deal delivering again. Possibly the UK deal with 2500-3000 scanners. I know there is a German deal for 12K scanners still in play. They need to continue to get sequential day-to-day sales happening and then when these big deals hit it's going to be a breakout quarter for revenue. This is when low expenses are the real positive.
New 8ci product. It's good to hear that it will be available by Sept 1 and that they expect acceptance of it and impact on revenues starting in November. A 2D model coming soon is good too. I know at the Shareholder's Meeting that everyone thought this product line could be bigger than the cordless scanner going forward.
Outlook on stock: It depends on people's time line and how far does the market look ahead? 4th Q numbers will start to build finally to solid results (should know by end of Oct in the 3rd Q cc call how the month has already started)---CEO said "breakout" revenue....we'll see. I will say that 12 months from now cordless scanners could be doing $4M/qtr, new product $2M/qtr, Somo $1.8M (I don't expect much here anymore), and OEM of $300K. That's $8.1M. By then gross margins will be 42% or so. If they stay aggressive on expenses and keep them below $2M, then that's $1.4M in net income (no taxes with the tax loss carry forward they have). That's a lot of $$ that can flow to the bottom line of a low float stock.
On the other hand, people may say 3rd Q isn't going to be exciting so I'll sell now and go chase some hot stock elsewhere and come back.
SCKT - Socket Mobile Unveils Attachable Barcode Scanner for the Apple® iPhone®
New product offers one-handed scanning solution for retail, field service and other mobile markets
Me: comments during Shareholder's Meeting on it...... the CEO during his slide presentation for the employees talked about the new product (no pictures or real details) and said they thought it could exceed the cordless scanner in revenue (from the feedback they had received from partners demoing it). We'll see. I'd be happy with $1M-$2M/qtr in 2014. I wouldn't be surprised to see a 2d model optical model later since they have the technology for it (and they have created a whole new series, i.e. the 8 series of scanners).
What's nice is it will be fully available for order in the 4th Q. They already have close to 600 scanner app developers signed up so it should be integrated into software products quickly.
NEWARK, Calif., July 23, 2013 /PRNewswire/ -- Socket Mobile, Inc. (SCKT), an innovative provider of mobile productivity solutions, today announced the upcoming availability of the Socket Bluetooth® Cordless Hand Scanner (CHS) Series 8, a small, thin and easy-to-use barcode scanner optimized for smartphones. Featuring full software support, the CHS Series 8 can be attached to a smartphone to form a one-handed scanning solution, ideal for users who need to keep a hand free to handle materials or equipment.
(Photo: http://photos.prnewswire.com/prnh/20130723/SF51350)
As small as a credit card, the CHS Series 8 is thinner than most smartphones and slips easily into a shirt or pants pocket. Weighing only 1.7 oz (48 g), it is the lightest Bluetooth barcode scanner on the market that can be attached to a smartphone in a sled-type scanning solution. The elegant scanner can be used either attached or detached from the phone, connects wirelessly to a broad range of Apple, Android and Windows devices, and is Apple MFi certified for the iPad®, iPad mini, iPhone and iPod touch®.
"Socket Mobile created the CHS Series 8 in response to high customer demand for a thinner barcode scanner that could be attached to a smartphone to form a single-handed solution," said Vince Coli, product manager at Socket Mobile. "With our highly popular CHS Series 7, Socket Mobile has become a leader in the mobile barcode scanning market, with most customers using them with tablets. The new CHS Series 8 complements our CHS Series 7 by leveraging the same great features and performance in a solution optimized for smartphones."
To watch a video of the product, please visit:
Guy...SCKT...new product....comments during Shareholder's Meeting on it...... the CEO during his slide presentation for the employees talked about the new product (no pictures or real details) and said they thought it could exceed the cordless scanner in revenue (from the feedback they had received from partners demoing it). We'll see. I'd be happy with $1M-$2M/qtr in 2014. I wouldn't be surprised to see a 2d model optical model later since they have the technology for it (and they have created a whole new series, i.e. the 8 series of scanners).
What's nice is it will be fully available for order in the 4th Q. They already have close to 600 scanner app developers signed up so it should be integrated into software products quickly.
SCKT: Partner news on ShopKeep & Vend & others + inventory update
ShopKeep just announced that they have teamed up with Global Bay ($3.6B public company) to allow Global Bay to provide a tablet based POS system to all their customers. ShopKeep uses the Socket 7m and 7xi scanner exclusively with their system.
Vend, based out of Austraila, just opened up a San Francisco office to expand their operations in the U.S. They (and ShopKeep) are the two POS systems that PayPal have encouraged their customers to use. Vend uses Socket 7ci and 7xi scanners.
On Socket's social feeds, they have put links of multiple new smaller partners (international POS systems) and even some company's using the Somo integrated into their products. It's obvious the number of developers and applications continue to grow and come to the market. As most of you know, I am able to track inventory sales (reasonably well) at N.A. distributors. Sales right now per week have ramped up in the last 4 weeks as inventory is now fully stocked (and is replenished almost immediately). Problems with backlog are a thing of the past. To put into perspective, sales I track are 2x what they were in January. Even last week (with the holiday and slow day after) ended up strong. What people seem to not realize is that this is just the beginning of the whole industry, not the peak. What's it going to be 12 months from now? What's going to happen when international orders continue to build? What's going to happen as large contracts start to flow in?
At the Shareholder's Meeting, Kevin told the employees that they think they will eventually sell 20K to 30K scanners per quarter in time (they did 10K in 1rst Q). Toss in a rebounding Somo division and don't forget the new product that was hinted about during the Shareholder's Meeting. The growth is coming whether people believe it or not. I also know that the company has stated that they are fully committed to keeping expenses as low as possible going forward. They can make problems with their balance sheet go away in time with strong cash flow. Also, it's only a matter of time before the stock moves up accordingly.
2nd Q numbers will be released on July 23rd with a cc call.
SCKT: Partner news on ShopKeep & Vend & others + inventory update
ShopKeep just announced that they have teamed up with Global Bay ($3.6B public company) to allow Global Bay to provide a tablet based POS system to all their customers. ShopKeep uses the Socket 7m and 7xi scanner exclusively with their system.
Vend, based out of Austraila, just opened up a San Francisco office to expand their operations in the U.S. They (and ShopKeep) are the two POS systems that PayPal have encouraged their customers to use. Vend uses Socket 7ci and 7xi scanners.
On Socket's social feeds, they have put links of multiple new smaller partners (international POS systems) and even some company's using the Somo integrated into their products. It's obvious the number of developers and applications continue to grow and come to the market. As most of you know, I am able to track inventory sales (reasonably well) at N.A. distributors. Sales right now per week have ramped up in the last 4 weeks as inventory is now fully stocked (and is replenished almost immediately). Problems with backlog are a thing of the past. To put into perspective, sales I track are 2x what they were in January. Even last week (with the holiday and slow day after) ended up strong. What people seem to not realize is that this is just the beginning of the whole industry, not the peak. What's it going to be 12 months from now? What's going to happen when international orders continue to build? What's going to happen as large contracts start to flow in?
At the Shareholder's Meeting, Kevin told the employees that they think they will eventually sell 20K to 30K scanners per quarter in time (they did 10K in 1rst Q). Toss in a rebounding Somo division and don't forget the new product that was hinted about during the Shareholder's Meeting. The growth is coming whether people believe it or not. I also know that the company has stated that they are fully committed to keeping expenses as low as possible going forward. They can make problems with their balance sheet go away in time with strong cash flow. Also, it's only a matter of time before the stock moves up accordingly.
2nd Q numbers will be released on July 23rd with a cc call.
SCKT..Inventory numbers update...someone is expecting growth to start soon.
My last update a few weeks ago showed in stock inventory numbers going from May 1rst of around 250 (total of all 3 N.A. distributors combined) to 1655 on May 30th. Phhht. Numbers now (as of last night) are 2790 scanners! I also track a few international sites and see scanner numbers there at the highest levels I've tracked yet too. If I compare this to the end of 1rst Q numbers, its now 3-4x that level or more, easily.
I know that it's not Socket that decides how much really goes into inventory, it's the distributors who put the orders in based on what they expect to start selling. Just for clarification, I'm not saying that sales I see are increasing at those kind of levels (actually I find June numbers to be just similar to May numbers), but someone is expecting sales to ramp up soon. It's interesting if nothing else. At least we don't have to worry about Socket being accused of being a poor supplier anymore or being so capital poor that they can't produce product. I asked the CFO during the shareholder's meeting if they had borrowed more money and he said they hadn't, it was just cashflow that is making things work.
Take this post for whatever it's worth, I just wanted to keep people up to date.
Dave
SCKT..Inventory numbers update...someone is expecting growth to start soon.
My last update showed in stock inventory numbers going from May 1rst of around 250 (total of all 3 N.A. distributors combined) to 1655 on May 30th. Phhht. Numbers now (as of last night) are 2790 scanners! I also track a few international sites and see scanner numbers there at the highest levels I've tracked yet too. If I compare this to the end of 1rst Q numbers, its now 3-4x that level or more, easily.
I know that it's not Socket that decides how much really goes into inventory, it's the distributors who put the orders in based on what they expect to start selling. Just for clarification, I'm not saying that sales I see are increasing at those kind of levels (actually I find June numbers to be just similar to May numbers), but someone is expecting sales to ramp up soon. It's interesting if nothing else. At least we don't have to worry about Socket being accused of being a poor supplier anymore or being so capital poor that they can't produce product. I asked the CFO during the shareholder's meeting if they had borrowed more money and he said they hadn't, it was just cashflow that is making things work.
Take this post for whatever it's worth, I just wanted to keep people up to date.
Dave
bbotcs...SCKT...I don't blame you one bit on holding off on the excitement. We all have to remember---this is Socket Mobile, pretty much the one company that seems to be able to disappoint for 20 years and still stay in business. They need to out perform and surprise to the upside for a few quarters to get people believing.
I will say this, I think they are in the best place to succeed in the history of the company. It's still not a guarantee though. One reason our group put a Director on the Board is to make sure that the mistakes of the past aren't completely forgotten so they don't get repeated yet again.
As I tell everyone, it is interesting if nothing else!
SCKT...my visit to the company at the Shareholder's Meeting:
I will start off by saying I was very impressed with the operations that are occurring at Socket Mobile. They are located in Newark, CA in a small industrial/warehouse area of the town. It's a good neighborhood (Apple has a small facility in the area), but the building was simple and the layout of their offices and cubicles was nice but not too extravagant.
I saw the whole series of barcode scanners that are being offered and the Somo products and accessories. There is no doubt that a lot of thought went into the design of the scanners. They look good. Aesthetics may not mean much to some people, but in retail it is important. There is no question the scanners look appropriate next to an iPad tablet (vs say the black Lego cube like product of Motorola).
I talked to the CEO, CFO, and two of the technical executives. I was very impressed with the direction they plan on taking the company. The company has some very sharp individuals with great ideas. They wouldn't give great detail on the next series of new products they have coming, but from what I know about the industry, the area they are targeting could generate revenue equivalent to what the cordless scanner division is doing. It was obvious they are very excited about what the technical team has come up with and feel very good about it. The new products will be tied to the software development kit.
Imo, the SDK is still the key product for Socket, not just for the scanners, but for the Somo now too. It's the driver to get partners. I've said it before and I'll say it again----this SDK is how they can beat companies like Motorola and Honeywell in the long run. Once the developer has spent the money integrating the Socket software code into their own programming code, it'd be very hard for the competition to come in and get it switched. Motorola may be able to muscle distributors and final large customers, but if the software is already written to use Socket's scanners exclusively, Motorola is shut out. You capture the developer, you capture market share that will be very very hard to have stolen away later.
A few things on the Shareholder's Proxy..... a group of minority shareholder's that I know (and am part of) banded together to put a new representative on the Board (other than management's choices). He's an extremely intelligent individual with a very strong marketing and sales resume. He also owns enough shares (that he's underwater on) that he comes at it from the perspective of frustrated long term shareholders. I think he will be a real benefit to the company and shareholders going forward. I'm not sure the company appreciated our actions, but as shareholders we have the right to do it and I think it will reward everyone in the end.
The second thing is Proposal #5: Authorize outstanding shares going from 10M to 20M. Right now, fully diluted (with all options and warrants) there are 7.7M shares outstanding. They wanted to increase the number of additional shares to 20M, not because of some immediate need, but for future use for when (as they fully expect) things become very successful going forward. The example I was given was a merger at $10 that could take them to a new level. I didn't vote for it, but it still passed easily. I'm not overly concerned by it. The company has no intention of diluting out the executives anymore or the employees and so I'm not worried about them hurting shareholders with this proposal. In the end, it will probably be beneficial as things play out and growth occurs.
If there is one thing I took away from meeting them all is that this company fully expects to take complete advantage of the lead they have in mobile applications/barcode use and drive it forward at full speed. Any doubt on my opinion of them was put to rest. They still have hurdles to get over (balance sheet and waiting for the partners, 500+ scanner developers now and 50+ Somo, to send business their way) but the future could be pretty amazing. As long as they continue to keep expenses down, even if the future is only "reasonably good", they will still become nicely profitable and the stock price will do very well in the next year.
I have more specific info I can pass along (I'd rather do it privately). Contact me if you'd like it.
SCKT...my visit to the company at the Shareholder's Meeting:
I will start off by saying I was very impressed with the operations that are occurring at Socket Mobile. They are located in Newark, CA in a small industrial/warehouse area of the town. It's a good neighborhood (Apple has a small facility in the area), but the building was simple and the layout of their offices and cubicles was nice but not too extravagant.
I saw the whole series of barcode scanners that are being offered and the Somo products and accessories. There is no doubt that a lot of thought went into the design of the scanners. They look good. Aesthetics may not mean much to some people, but in retail it is important. There is no question the scanners look appropriate next to an iPad tablet (vs say the black Lego cube like product of Motorola).
I talked to the CEO, CFO, and two of the technical executives. I was very impressed with the direction they plan on taking the company. The company has some very sharp individuals with great ideas. They wouldn't give great detail on the next series of new products they have coming, but from what I know about the industry, the area they are targeting could generate revenue equivalent to what the cordless scanner division is doing. It was obvious they are very excited about what the technical team has come up with and feel very good about it. The new products will be tied to the software development kit.
Imo, the SDK is still the key product for Socket, not just for the scanners, but for the Somo now too. It's the driver to get partners. I've said it before and I'll say it again----this SDK is how they can beat companies like Motorola and Honeywell in the long run. Once the developer has spent the money integrating the Socket software code into their own programming code, it'd be very hard for the competition to come in and get it switched. Motorola may be able to muscle distributors and final large customers, but if the software is already written to use Socket's scanners exclusively, Motorola is shut out. You capture the developer, you capture market share that will be very very hard to have stolen away later.
A few things on the Shareholder's Proxy..... a group of minority shareholder's that I know (and am part of) banded together to put a new representative on the Board (other than management's choices). He's an extremely intelligent individual with a very strong marketing and sales resume. He also owns enough shares (that he's underwater on) that he comes at it from the perspective of frustrated long term shareholders. I think he will be a real benefit to the company and shareholders going forward. I'm not sure the company appreciated our actions, but as shareholders we have the right to do it and I think it will reward everyone in the end.
The second thing is Proposal #5: Authorize outstanding shares going from 10M to 20M. Right now, fully diluted (with all options and warrants) there are 7.7M shares outstanding. They wanted to increase the number of additional shares to 20M, not because of some immediate need, but for future use for when (as they fully expect) things become very successful going forward. The example I was given was a merger at $10 that could take them to a new level. I didn't vote for it, but it still passed easily. I'm not overly concerned by it. The company has no intention of diluting out the executives anymore or the employees and so I'm not worried about them hurting shareholders with this proposal. In the end, it will probably be beneficial as things play out and growth occurs.
If there is one thing I took away from meeting them all is that this company fully expects to take complete advantage of the lead they have in mobile applications/barcode use and drive it forward at full speed. Any doubt on my opinion of them was put to rest. They still have hurdles to get over (balance sheet and waiting for the partners, 500+ scanner developers now and 50+ Somo, to send business their way) but the future could be pretty amazing. As long as they continue to keep expenses down, even if the future is only "reasonably good", they will still become nicely profitable and the stock price will do very well in the next year.
I have more specific info I can pass along (I'd rather do it privately). Contact me if you'd like it.
Traderfan.....SCKT...I was at the Shareholder's Meeting yesterday. I'll explain more later. It's primarily a non-event (even though I voted against it). It's there for the future, not for anything now. I will post later.
SCKT...Inventory update for end of May......
(This is an update to the inventory I track at Ingram, Scansource, and Bluestar for N.A. distributors).
I have to admit that scanner sales are getting harder to track and one reason is that they have made a HUGE difference in the amount of inventory they are carrying at distributors. One of my worries has always been is that Socket would be seen as a poor supplier since they always seemed to have units backlogged (ex. at the beginning of May, they only had 255 units total (of all models combined) in the three distributors I keep an eye on in N.A. (Ingram, Scansource, Bluestar). There was a backlog of almost 300 7ci units at that time! Sales have been growing sequentially each month, but Socket didn't seem to be able to keep up at times. Small companies often fail from being able to keep up with growth.
This has completely changed in the last 3 weeks. As of last night, they currently have 1655 units total (again, all models combined at all N.A. distributors). If we say that the average scanner price is $240 (it's weighted to the downside since more 7ci's are in inventory than the more expensive units), that's $397K in inventory now vs $80K or so just 30 days ago. Even now, they continue to get new inventory delivered as soon as it is selling. They obviously have the capital to do it and the kinks in the supply chain have been smoothed out. I know distributors only take orders based on what their end customers are asking for so it's looking pretty good here.
Their plan appears to be coming together nicely. I'm not sure what this will mean in 2nd Q numbers. I'd be happy with $5M and 4 cents/share. There will be strong growth in scanners for certain, the key will be what type of growth do they have in the Somo side of the business to add to it. I do know they will have around $200k in extra expenses as all employees are back to full-time work. Going into 3rd Q, that increase in expenses shouldn't happen and so the additional sequential growth that will occur should hit the bottom line nicely.
Dave
SCKT... Partner news: Square goes to Japan. Vend gets $8M funding.
Square is going international with their product, including the Square Register. This will only benefit Socket as their provider of a cordless barcode scanner.
http://www.finextra.com/News/FullStory.aspx?newsitemid=24850
New Zealand based Vend, which uses Socket scanners, just got venture capitalist funding of $8M to expand their operations.
http://pandodaily.com/2013/05/17/new-zealand-based-vend-raises-8m-without-turning-to-the-valley/
OT..Littlefish... that smoked salmon was good! Definitely keep me in mind :o)
SCKT....a quick update on inventory numbers
For those that pay attention to what I post, I have found a way to track Socket's inventory numbers that occur at Ingram Micro, ScanSource and Bluestar in North America. It gives me a window into what's going on.
Two weeks ago I wrote to the CFO to tell him that I was bothered by the lack on inventory at distributors. Sales may be growing sequentially each month, but I worry about the building backlogs affecting Socket's perception at being a good supplier. I worried that perhaps they are just so short on capital that that they couldn't handle business. He told me to look for a change in the near future as their supply chain catches up.
Needless to say the scanners are starting to roll in! I won't get into sales numbers too much for now (because it's actually hard to track units sold when new units come in each day on top of it), but inventory for the 7ci scanner is higher than I've ever seen and then some. To put into perspective, last month they never had one unit in inventory. Everything went to backlog orders and they never caught up. Now they have taken care of all the backlog and have over 770 units in stock of the 7ci scanners. That's $150K worth that they obviously have the capital to build and ship so it's available immediately. I will get a better idea of the sales rate as this is depleted, but I do know from Ingram Micro sales numbers (which are the easiest and most accurate to track), that sales of the 7ci units there are 1.5x the rate of last month (and most of that is coming in the last week as the inventory rolls in). April was the best month I'd ever seen too for the 7ci (their most popular unit). The rest of the units (combined) are doing similar rates to last month.
I know from articles I've read, the new Square Stand is going to be a potential game changer for the tablet point of sale industry going forward. Square is taking orders now for delivery in July. The scanner can take several USB corded barcode scanners, but, the stand is made to swivel (so the employees can take your info/credit card and then swing it around so you can sign the iPad with your finger). You can't swivel a unit with a corded barcode scanner attached. As such, you need a cordless one. I know that several units will work there, but the ONLY one listed on Square's page is the Socket 7ci.
The only thing that bothers me lately is there are sellers. I cannot understand why (nothing that I know of is negative anymore). However, over 600K shares traded below $1.20 in the last 9 months so it could be many of them taking a guaranteed profit. The nice thing is there are buyers stepping up.
SCKT....a quick update on inventory numbers
For those that pay attention to what I post, I have found a way to track Socket's inventory numbers that occur at Ingram Micro, ScanSource and Bluestar in North America. It gives me a window into what's going on.
Two weeks ago I wrote to the CFO to tell him that I was bothered by the lack on inventory at distributors. Sales may be growing sequentially each month, but I worry about the building backlogs affecting Socket's perception at being a good supplier. I worried that perhaps they are just so short on capital that that they couldn't handle business. He told me to look for a change in the near future as their supply chain catches up.
Needless to say the scanners are starting to roll in! I won't get into sales numbers too much for now (because it's actually hard to track units sold when new units come in each day on top of it), but inventory for the 7ci scanner is higher than I've ever seen and then some. To put into perspective, last month they never had one unit in inventory. Everything went to backlog orders and they never caught up. Now they have taken care of all the backlog and have over 770 units in stock of the 7ci scanners. That's $150K worth that they obviously have the capital to build and ship so it's available immediately. I will get a better idea of the sales rate as this is depleted, but I do know from Ingram Micro sales numbers (which are the easiest and most accurate to track), that sales of the 7ci units there are 1.5x the rate of last month (and most of that is coming in the last week as the inventory rolls in). April was the best month I'd ever seen too for the 7ci (their most popular unit). The rest of the units (combined) are doing similar rates to last month.
I know from articles I've read, the new Square Stand is going to be a game changer for the tablet point of sale industry going forward. Square is taking orders now for delivery in July. The scanner can take several USB corded barcode scanners, but, the stand is made to swivel (so the employees can take your info/credit card and then swing it around so you can sign the iPad with your finger). You can't swivel a unit with a corded barcode scanner attached. As such, you need a cordless one. I know that several units will work there, but the ONLY one listed on Square's page is the Socket 7ci.
Hweb2...SCKT:
I like posting primarily in the Value Zip Code site because I think this stock really could be a zip code changer. They have issues (the balance sheet) and hurdles to cross, but they can grow revenue here such to take care of it. If this company had a pristine balance sheet and was on the Nasdaq still, it wouldn't be $1.75 (more like 3x this).
The use of tablets for point of sale systems (and cash registers) by small businesses is undergoing a revolution. Like one of my posts commented on, NCR ($5.17B company) just teamed up this week with Vantiv ($3.6B company) to go after this market aggressively. They are doing it because Square (multi-billion dollar IPO later this year) already has a head start (Square just upped the challenge by introducing new hardware). Fujitsu ($8B) is going after the world market. The ironic thing is, Socket is a $10M company whose barcode scanners are used by them all. All of them chose it independently because of the quality and, especially, the software development kit. Socket has some incredible software engineers!
The honesty of this little company:
1. They know the opportunity that exists. When they ran low on funds last year (they spent too much in product development and the transition slow downs hurt them badly. It's what put them on the OTC market from the Nasdaq as sharholder equity dropped), the Board (especially the Chairman and founder) raised funds by doing a debt conversion with their own money rather than let some vulture capitalist fund steal shares cheap. Rather then do it at market prices, they did the August deal at $2 (price that day) if all the warrants to Hudson Bay are gone when the conversion expires in August 2014, $2.44 if they still exist. The deal in October was $1.12 (price that day) if all the warrants to Hudson Bay are gone by August 2014, $2.44 if they are not. This is the important part: Hudson Bay holds 500K warrants exercisable at $2.44 that don't expire till 2016. If management sells shares under $2.44, those warrants are lowered to that stock sell price. In all likelihood, there is no way all the warrants will be exercised by August 2014. If management wanted to steal this company and screw shareholders (like most OTC stocks), they could of sold themselves shares at the current stock price that day and let the warrants drop in price too. What would they care, they got what they wanted. Instead, the end result is they will pay $2.44 for their shares most likely (even when the stock was less than 1/2 that price) so that way they prevent Hudson Bay from getting their warrants cheaper (and Socket getting less money in the conversion). The CFO has told me that vulture capitalist funds are offering plenty of money at horrible terms, but they aren't biting. Cash flow is positive and they can make it work till the stock price is significantly higher. He told my friend just yesterday that they have no immediate need for additional capital. The Chairman, CEO, and Roy Rogers Trust Fund (which holds 375K shares) are loaning the company $500k right now (at higher interest rates then they should but it's better than selling more shares and dilution). Cash flow is building which increases their line of credit with the bank. They are not going to screw themselves and everyone else when the opportunity they have dreamed of is building.
2. To tell you how honest the CFO is: I have a coalition of minority shareholders that make us the largest shareholder in Socket. We are pooling that power to put a representative on the Board of Directors at the Board meeting on June 5th (I'm doing this because I intend to make a lot of money here and I want someone on the Board to push my agenda of keeping expenses low and taking care of shareholders finally. This candidate is very well qualified). Rather than fight us or make it difficult, the CFO respects the fact we have been able to build a coalition of minority shareholders large enough to make a difference and is actually giving us step by step directions on how to cumulate our shares and vote him in for certain (even though it means 1 of the company's choices will lose).
On a different note, the CEO is going to Japan at the end of this month. He is there to check on how Socket's scanners are doing with the trial order that Fujitsu signed with a Japanese conglomerate in 1rst Q (that Socket provided 3200 scanners for). If Fujitsu closes the rest of the deal (most likely), Socket will be getting an order for 28K more scanners to be delivered in 3rd and 4th Q. That's $5.6M on top of whatever expected growth is already going to occur from the normal process (which should be 10-15% sequential from Q2 already). Socket's expenses barely go up with increased scanner sales. No more sales people added, no more execs, no more engineers, really it's just another Mexican lady or two added to the 5 they have in the warehouse who snap the scanner parts from Asia together (and those parts actually get cheaper per unit as more are ordered). If Socket gets this Japanese deal, this company will do 15 cents/share or better in 3rd Q imo. At that point they can sell 1M shares to institutions at $4-5, regain Nasdaq listing, and clean up there balance sheet in one fell swoop. They can then gear up for the real growth as this industry explodes in the next year or two. The are the market leader here.
One last thing: Later this year Square will do their $4-5B IPO. Wall Street is going to be buzzing about it and the retail use of tablets. This is the nanocap play on it. This stock will move up just on their association alone with Square let alone all the other partners.
Dave
SCKT: new products by their billion dollar partners, Square & NCR
NCR just teamed up with Vantiv (VNTV, $3.4B marketcap) to offer the NCR Silver platform and hardware (which only uses Socket's scanners for customers that want one) to Vantiv's credit card and merchant processing business.
"Research by McKinsey and Company shows that up to 50 percent(2) of small and medium-sized businesses are considering moving to a tablet POS or mobile POS system. With more than five million(3) small-to-medium sized businesses in the United States, the strategic relationship between Vantiv and NCR provides expanded reach and distribution capabilities that capitalize on this trend."
http://finance.yahoo.com/news/vantiv-ncr-bring-powerful-mobile-120000998.html
Square just announced the "Square Stand". It's their newest product to make the iPad the replacement for cash registers. A barcode scanner can be integrated into it (and the only one listed on Square's page under "compatible hardware" is Socket's scanner).
http://www.usatoday.com/story/tech/2013/05/14/square-stand-ipad/2158147/
Socket's balance sheet isn't the prettiest, but other than that, this frickin' little company is lining up partners that will make it a winner. Sales of 7ci scanners (their most popular unit) are going exponential. The last 3 quarters were: 1200 units, then 2400 units, then 6000 units, should be over 10K units this qtr. If they close the Japanese deal, 3rd and 4th Q will approach 15-20K units. Tablet based point of sale systems are the future and Socket has the partners that will do all the selling for them.
Hegotgame...SCKT...a few months back, Socket management was telling someone I know that they feel the major competitors for the cordless barcode scanner market for tablets/smartphones are about 1 year behind Socket (due to the rapid acceptance by developers for their software development kit and their wide spectrum of available scanners that can be used on any operating system). Their biggest competitor in their opinion will be Motorola in the future. Today's announcement is just another example of Socket pushing their products forward to stay ahead of everyone else.
Dave
SCKT..Socket Mobile Releases Apple® Certified Laser Barcode Scanners for iPad® and iPhone®
High-performance barcode readers expand company's line of Apple
certified scanners
****Me: This is just another example of why they are the #1 leader in cordless barcode scanners being used by businesses with mobile point of sale. This gives them 2 laser scanners plus multiple optical scanners, plus various colors. They also have, what Rugged and Mobile Hardware calls a "great SDK (software development kit), probably the best out there".
NEWARK, Calif., May 14, 2013 /PRNewswire via COMTEX/ -- Socket Mobile, Inc.
(OTC: SCKT), an innovative provider of mobile productivity solutions, today
announced the availability of Apple certified, laser-based versions of the
Socket Bluetooth® Cordless Hand Scanner (CHS), a small and sleek wireless
barcode scanner for smartphones and tablets. The new scanners enable businesses
in automotive services, logistics and other mobile markets to efficiently record
work orders, manage invoices, and track assets and inventory in real time using
the iPad®, iPad mini, iPhone® and iPod touch®.
The new scanner models, known as the CHS 7Mi and CHS 7Pi, feature a
high-performance, industry-leading laser for reading 1D barcodes in a variety of
lighting conditions and work environments, including in bright sunlight, on
curved or reflective surfaces, and through plastic or glass, such as for
scanning a Vehicle Identification Number (VIN) through a car's windshield. The
CHS 7Mi has a standard exterior casing, while the CHS 7Pi features an extra
durable exterior casing that can withstand multiple 6.6-foot (2-meter) drops to
concrete.
"Socket Mobile was early to market with one of the first barcode scanners
certified by Apple for iOS devices," said Vince Coli, product manager at Socket
Mobile. "With the new CHS 7Mi and 7Pi, Socket Mobile now offers a complete line
of Apple certified barcode scanners, with seven models ranging from entry-level
to high-performance, to fit any mobile application or work environment where 1D
or 2D barcode scanning is required."
Like all of Socket's CHS product line, the CHS 7Mi and 7Pi also work with
Android, Windows and BlackBerry smartphones and tablets. The scanners are
available from Socket Mobile's worldwide distribution channels and online at:
http://www.socketstore.com. Developers can obtain a Software Development Kit
(SDK) at: http://developer.socketmobile.com/
bbotcs...SCKT...An article on their partner Square and iPad POS. This is the side of the business that Socket is teaming up with their big name partners to go after.
http://www.finextra.com/News/FullStory.aspx?NewsItemID=24781
Square raids PayPal for retail expertise as POS terminal business builds
Mobile POS outfit Square has raided rival PayPal to appoint a new head of retail partnerships as the company reports fast growth in the tablet point-of-sale terminal market.
As Square's vice president of partnerships, new hire Alex Petrov will be charged with driving strategic business development and customer acquisition. Petrov comes to Square from PayPal where he was responsible for merchant marketing and launching PayPal into an offline retail environment.
Petrov has a working knowledge of the merchant account market from a previous stint as VP of consumer brands at Safeway, where he led the marketing and growth of the supermarket chain's private brands portfolio, launching over 1000 new products.
While Square usage continues to grow on smartphones, it is accelerating at a faster rate on iPads, where customers are using Square as a full point-of-sale system. Square says iPad customers now represent nearly 50% of total payments processed.
The tablet-as-terminal business poses a growing threat to traditional eftpos vendors.
New research from analyst house Javelin estimates that mobile POS could expand the current payment card acceptance by as much as 20 million firms if eligible firms started accepting payments. This impact could account for up to $1.1 trillion in annual new-card payments.
Littlefish...SCKT...A few things I've learned recently:
--I complained to the CFO that, even though scanner sales (from my tracking of inventory at NA distributors) are improving month-to-month, deliveries to distributors seems to always be against the backlog and never seems to get ahead of the curve. His response to me was that the strong demand has been such that their suppliers haven't been keeping up at the level they need them to be, however, that should start to change here the rest of this month and going forward. In my opinion, it's important Socket is seen as a good supplier to all their partners.
--The CFO won't go into any real detail, but he says the company is standing by their conference call statements of "increased scanner sales, increased Somo sales and increased profitability". On the last cc call there was talk of a "new OEM product"----it's not really a new product, but a new customer that is using Socket's bluetooth technology in their own product. The CFO said to look for that division to stay in the $500K range for this quarter and perhaps grow a bit going forward. (A positive considering it was in the $200K-$300K range historically).
--The CEO goes to Japan next week. That's an important trip as it could help lock up the next phase of the Japanese deal (around 30K 7ci scanners).
--On the cc call they discussed United Van Lines as a customer. I know they have started shipping on this order. No idea on the size of it. They hope to do a press release on it but they need approval from United Van Lines first (he's not sure they will get it as many company's don't like to be used by other companies for press releases).
--The new scanners, 7pi and 7mi, are shown on their website right now. I've been told to expect a public announcement on them as soon as they are available to buy (which I was told was around mid-May).
--One of the insiders, Michael Gifford, oddly exercised some of his options he received in October and sold them already (he's done similar things in the past). The CFO said he can't speak for exactly why it was done, other than it's part of his 10b5-1 plan that was set up, but it's not a reflection of anything going forward with the company. (He has told people in the past that Gifford has a daughter in college and he often needs to fund her studies. The executives had their salaries cut 33-40% from Nov 1rst to April 1rst as they were cutting costs hard as the transition to the increased sales hadn't finished yet). The CFO reiterated that the company thinks they are on the verge of a very large and upcoming market for their products.
--I will be at the Shareholder's Meeting on June 5th.
Dave
SCKT, HWEB, multi-billion dollar partners now selling their 7ci scanner. I dare anyone else to show my one other $5M market cap company that has partners like this. NCR, Fujitsu, Casio, Panasonic and now Square (plus up to 100 smaller POS systems according to the cc call) that have all independently chosen this little company's scanners in the last 6 months. Their scanners and, especially their software development kit, are that good.
Anyone who hasn't taken the time to see where tablet based point of sale systems are going, you are missing the opportunity of a lifetime. 80% of all small businesses are expected to go that direction in the next 5 years.
SCKT: Square choses Socket as their scanner of choice!
NCR, Fujitsu, Casio, Panasonic, and now Square. Every major point of sale system has independently chosen this tiny nanocap of a company's scanners to use in their new point of sale systems.
Multiple billion dollar partners going after the tablet use by businesses and taking Socket Mobile along with them.
http://finance.yahoo.com/news/square-selects-socket-mobile-barcode-103000126.html
You can see the barcode scanner here in the hardware set up. In time I expect it to be sold on their website: https://squareup.com/help/en-us/article/5084-using-hardware-with-square-register
NEWARK, Calif., April 30, 2013 /PRNewswire/ -- Socket Mobile, Inc. (SCKT), an innovative provider of mobile productivity solutions, today announced that Square, Inc. has selected the Socket Bluetooth® Cordless Hand Scanner (CHS) 7Ci barcode scanner for Square Register, a full point-of-sale system running on the Apple iPad or iPad mini that enables businesses to accept payments, track inventory, and share location information.
Square makes commerce easy for everyone, with a free credit card reader for the iPhone®, iPad and Android devices. The company processes more than $10 billion in transactions every year.
Certified by Apple for the iPad, iPad mini, iPhone and iPod touch®, the Socket CHS 7Ci is Socket Mobile's best-selling barcode scanner for smartphones and tablets. Small, sleek and comfortable to hold, the Socket CHS 7Ci connects wirelessly to a broad range of devices and enables retailers to quickly and accurately capture barcode information on product labels or device screens. The Square Business in a Box hardware bundle, which features the Square credit card reader, a wireless receipt printer and cash drawer, includes on-screen instructions for installing the Socket CHS 7Ci barcode scanner.
SCKT...PR: Socket Mobile releases 7ci (the #1 POS scanner) in new colors.
This might sound like kind of a silly press release, but aesthetics in retailing is very important. It shows how Socket is being innovative and different from the competition. It's how why the 7ci scanner is now used by NCR, Fujitsu, Casio, Panasonic and (according to the cc call) being chosen by 100 POS systems overall in just the last 6 months.
NEWARK, Calif., April 29, 2013 /PRNewswire/ -- Socket Mobile, Inc. (SCKT), an innovative provider of mobile productivity solutions, today announced the upcoming availability of a spring color collection of the Socket Bluetooth® Cordless Hand Scanner (CHS) 7Ci, a small and sleek wireless barcode scanner for the Apple iPad®, iPad mini, iPhone® and iPod touch®. The vibrant new barcode scanners — available in red, yellow and blue — enable businesses to enhance corporate branding in retail point-of-sale (POS), field sales and service, and other customer-facing applications.
(Photo: http://photos.prnewswire.com/prnh/20130429/SF02994)
Chosen by global POS leaders and independent developers alike for their mobile POS solutions, the Socket CHS 7Ci is Socket Mobile's most popular and lowest-cost barcode scanner. Besides enhancing retail branding, the new colors make the scanners easy to find in store aisles or other busy work environments, enable developers to bundle a cohesive hardware and software solution, and allow personalization of devices among users. The scanners also support Android, BlackBerry and Windows devices.
"The BikePartners.net bike shop purchased the Socket CHS 7Ci at the recommendation of Registroid, the provider of our Android-based POS system," said Geoffrey Smith, owner of the full-service bicycle shop in Santa Rosa, California. "When presented with different barcode scanner colors, we chose yellow because it makes the scanner easier to find among all the bicycle parts, equipment and accessories in our store, plus yellow has special meaning in the sport of cycling where competitions like the Tour de France award champions a yellow jersey."
"As retailers transition from traditional cash registers to mobile POS systems, there is increasing demand for smaller, more stylish barcode scanners for employees to use while interacting with customers on the sales floor," said Vince Coli, product manager at Socket Mobile. "Retailers invest a lot into creating attractive shopping environments that complement their corporate identity, and Socket Mobile's colorful new barcode scanners enable businesses to not only improve customer service and store operations, but also reinforce the hip, modern in-store experience that today's retailers strive for."
SCKT...PR: Socket Mobile releases 7ci (the #1 POS scanner) in new colors.
This might sound like kind of a silly press release, but aesthetics in retailing is very important. It shows how Socket is being innovative and different from the competition. It's how why the 7ci scanner is now used by NCR, Fujitsu, Casio, Panasonic and (according to the cc call) being chosen by 100 POS systems overall in just the last 6 months.
NEWARK, Calif., April 29, 2013 /PRNewswire/ -- Socket Mobile, Inc. (SCKT), an innovative provider of mobile productivity solutions, today announced the upcoming availability of a spring color collection of the Socket Bluetooth® Cordless Hand Scanner (CHS) 7Ci, a small and sleek wireless barcode scanner for the Apple iPad®, iPad mini, iPhone® and iPod touch®. The vibrant new barcode scanners — available in red, yellow and blue — enable businesses to enhance corporate branding in retail point-of-sale (POS), field sales and service, and other customer-facing applications.
(Photo: http://photos.prnewswire.com/prnh/20130429/SF02994)
Chosen by global POS leaders and independent developers alike for their mobile POS solutions, the Socket CHS 7Ci is Socket Mobile's most popular and lowest-cost barcode scanner. Besides enhancing retail branding, the new colors make the scanners easy to find in store aisles or other busy work environments, enable developers to bundle a cohesive hardware and software solution, and allow personalization of devices among users. The scanners also support Android, BlackBerry and Windows devices.
"The BikePartners.net bike shop purchased the Socket CHS 7Ci at the recommendation of Registroid, the provider of our Android-based POS system," said Geoffrey Smith, owner of the full-service bicycle shop in Santa Rosa, California. "When presented with different barcode scanner colors, we chose yellow because it makes the scanner easier to find among all the bicycle parts, equipment and accessories in our store, plus yellow has special meaning in the sport of cycling where competitions like the Tour de France award champions a yellow jersey."
"As retailers transition from traditional cash registers to mobile POS systems, there is increasing demand for smaller, more stylish barcode scanners for employees to use while interacting with customers on the sales floor," said Vince Coli, product manager at Socket Mobile. "Retailers invest a lot into creating attractive shopping environments that complement their corporate identity, and Socket Mobile's colorful new barcode scanners enable businesses to not only improve customer service and store operations, but also reinforce the hip, modern in-store experience that today's retailers strive for."
SCKT...some data I've collected on my inventory tracking
Potential scanner growth coming using data from last 4 months:
According to the cc call back in February, most of the point of sale system partners indicated to Socket that they would start to advertise and push their systems starting some in March and all of them in April. Here's an interesting bit of info I brought together from the inventory I track at the website that follows Ingram Micro in N.A.
This is the number of 7ci and 7xi units (two most popular units) in stock at the end of the month (I'm going to include backlog in this number if the actual number is 0) and also the number of units expected to be delivered over the next month (I'm using this because distributors like to stock heavily in the first half of the month and let's inventory draw down in the 2nd half). Also, I've found that not all the "expected units" get delivered or sold but the orders they put in for are indicative of what the distributors expect their customers will want for the month.
December: 7ci and 7xi in stock end of Nov = 33 units left. 180 units on order for delivery in December (again both units combined).
January: 7ci and 7xi in stock end of Dec = 10 units left. 368 units on order for deliver in January (again both units combined).
February: 7ci and 7xi in stock end of Jan = (-35, zero in stock, orders backlogged). 508 units on order for delivery in February.
March: 7ci and 7xi in stock end of Feb = (-10). 516 units on order for March.
April: 7ci and 7xi in stock end of March = (-2). 509 units on order for April.
May: The end of the April isn't till Tuesday but the numbers on order for May are already out.
7ci and 7xi in stock close to end of April = (-64). 1525 units on order for May!
The point I'm making is in comparing the desired deliveries in Dec and Jan, then it goes to a new level in Feb, March, April and now a new level is forming in May. Distributors don't put in orders unless their customers are asking for more. I don't get this same type of info from ScanSource and BlueStar but I do know that their sales for each month are increasing sequentially.
SCKT: cc call...potential 100-150K unit scanner deal in Japan??
That was a real highlight of the cc call. The 3200 scanner "trial order" in partnership with Fujitsu was with a retailer with 50K locations. The CEO said it could be 2-3 scanners per location. He will be going to Japan in the 2nd Q to follow up on it all.
This tells you the potential of tablet based point of sale growth. This is the first inning of a double header and SCKT just showed they can be net income positive already. Wait till things really start to roll.
Their Somo and OEM departments will grow sequentially too (just not at the same rate). When added together, though, it should start to make for some nice profits down the line. By the end of 3rd Q, I expect some great things to be happening.
On April 2nd I posted my estimates of "That makes it $2.65M in scanner sales + $300K OEM + $1.3M Somo= $4.25M for sure with upside potential. The CFO told me they need $4.3M to be net income positive." They did $2.4M in scanner, $500K in OEM, and $1.4M in Somo and net income positive. I was off a little but pretty close. I will give my estimates for 2nd Q going forward.
Dave
SCKT.... potential 100-150,000 unit scanner deal in Japan??
That was a real highlight of the cc call. The 3200 scanner "trial order" in partnership with Fujitsu was with a retailer with 50K locations. The CEO said it could be 2-3 scanners per location. He will be going to Japan in the 2nd Q to follow up on it all.
This tells you the potential of tablet based point of sale growth. This is the first inning of a double header and SCKT just showed they can be net income positive already. Wait till things really start to roll.
Their Somo and OEM departments will grow sequentially too (just not at the same rate). When added together, though, it should start to make for some nice profits down the line. By the end of 3rd Q, I expect some great things to be happening.
On April 2nd I posted my estimates of "That makes it $2.65M in scanner sales + $300K OEM + $1.3M Somo= $4.25M for sure with upside potential. The CFO told me they need $4.3M to be net income positive." They did $2.4M in scanner, $500K in OEM, and $1.4M in Somo and net income positive. I was off a little but pretty close. I will give my estimates for 2nd Q going forward.
Traderfan...SCKT... The float on this stock is very small. Of the 4.8M shares outstanding right now, I can tell you who owns 2.5M of them for certain (Only around 30 people or so......insiders, large shareholders, and a whole bunch of medium size/small shareholders I personally communicate with). As such, it's going to be extremely volatile going forward imo as buyers and sellers can move the price just by their own actions.
It's why twice in the past (when the 7xi was initially announced in 2011 and the 7ci in 2012) that the stock went close to $4 intraday when 300K+ shares hit it. On a side note: I know they will be announcing their new 7pi and 7mi (Apple certified laser scanners for tablets/industrial/warehouse us) in early May. It'd be nice for a similar reaction. I doubt it, but it'd be nice.
From all the research I've done and the inventory tracking, I'm almost certain that good news will be coming this afternoon. Then again, it's SCKT and I'm used to being surprised in the wrong way.
SCKT...more colored 7ci scanners coming available soon
I found out through one of the sites I track (and then verified it with the CFO a little while ago) that Socket is expanding the color options of their most popular 7ci model. They added yellow a little while ago for special order only. They now will add red and blue also and all of them will be available to carry by the distributor for general delivery (it's up to the distributor to order what they think they can sell).
Overall, it's not a big deal, but it highlights the fact that Socket is stepping up to provide customers who are using tablets and smartphones the best selection of scanners available. They will have:
7ci: 1D optical scanner in grey, yellow, red, blue. Will work on Apple IOS system, Android operating system, BlackBerry OS, Microsoft Tablet OS using their highly customizable software development kit.
7di/7diRX: 1d optical scanner with hard case (and optional anti-bacterial case). Works on all tablets with SDK.
7xi/7xiRX: 2d optical scanner with hard case (and optional anti-bacterial case). Works on all tablets with SDK.
7M: 2d laser scanner that works on all tablets with SDK.
7P: 2d laser scanner focused on industrial customers that works on all tablets with SDK.
This is why NCR, Fujitsu, Casio, Panasonic, ShopKeep, Lightspeed, and a whole bunch of other POS developers have all chosen Socket as their barcode scanner for their systems. It's why scanner sales are ramping up and should grow substantially going forward.
(ex. They sold 1200 7ci scanners in 3rd Q, 2500 in 4th Q, I expect they will sell at least 8200 this quarter. I expect it to grow sequentially in 2Q and will be over 20K in 3rd Q----pretty much a guarantee if their partner, Fujitsu, gets the rest of the Japanese order that they just did a trial shipment on).
Dave
SCKT.....new scanner products coming soon
One of the websites I track shows the data that comes straight from Ingram Micro. Today there were two new scanners shown, the 7mi and 7pi. I contacted the CFO about them. The company has taken their two laser scanners and incorporated their Software Development Kit into them completely so they will be Apple Certified (and also work on Android, Microsoft, and BlackBerry products). This easily makes Socket the #1 company for the diversity of scanners that will work with any tablet or smartphone available (with the SDK that allows developers to integrate and customize the scanner into their software). The CFO said that Ingram was a bit premature in letting this info be shown----the product won't be available for order until May 1rst and won't be shipped until mid-May. There will be a press release to the investment community as they get closer to the product being available. I just happened to stumble across the mistake today and am bringing it to everyone's attention. Remember, the two times this stock has gone over $3 on hype is when they announced the 7xi and the 7ci. If they came out with a strong number for 1rst Q (I know I've been wrong before but I'm almost 100% certain they will be net income positive for 1rst Q and forecast sequential growth for 2Q) followed by this type of press release, then my guess is that a $1.10 stock price will be long gone. It'll be about time too.
Dave
SCKT....1rst Q estimates
This company is finally going to get their act together here. 1rst Q estimates in my opinion are there won't be any $2.8M ugly surprises happening. From the scanner numbers I track through N.A. distributors, Jan and Feb were stronger than November, March was stronger than December. They did $1.5M in scanner sales in 4th Q. Using the same ratio estimate of domestic vs international sales and applying it to the numbers I've seen happen, it puts it at $1.9M in sales. However, this does not include 2 large orders. The first one was the Japanese trial order of 3200 scanners which I figure is worth $600K. I also have heard there was a smaller order they worked on for several weeks (no real details known). I assume it's around $150K. That puts total scanner sales at $2.65M at minimum. There may be upside to this, but I'm quite confident there is no downside.
I assume OEM/Service will be $300K like it is every quarter.
Somo---The CFO commented to me awhile back that this side of the company was starting to rebound nicely. I started tracking it the best I can. There is no doubt it will exceed 1200 units/$900K that was recorded in 4th Q. I know this because I can account for almost 950 units through N.A. distributors in 1rst Q alone. I obviously don't see the whole pie of what happens in the U.S. I've heard through others that Somo sales in the U.K, Japan, and Germany have been strong this quarter. I'm quite comfortable putting Somo sales at 2000 for the quarter at minimum. With accessories, scanner attachments, and extended warranties added in, I put Somos at $1.3M for sure with upside potential.
That makes it $2.65M + $300K + $1.3M = $4.25M for sure with upside potential. The CFO told me they need $4.3M to be net income positive. What this means is that with all the problems this company has, they will be net income positive as scanner sales finally start to explode in growth and Somos rebound. 2nd Q numbers should start to rock as the company has stated they expect record scanner sales going forward each qtr.
Dave
SCKT....latest update....
From CFO to me: The company is very committed to keeping expenses low. It's a fine line though on salaries and hours because you can't afford to lose key people. They feel good they are holding the balance well. Expenses in 1rst Q will be kept near 4th Q numbers (which were historic lows) and they need $4.3M to be net income positive (I asked this specifically---not cash flow positive, but net income positive). It was emphasized again----increasing scanner sales does not increase expenses much since they only need to provide scanners, as the partners do all of the sales/marketing/advertising. It means warehouse employees need to be added in time with growth, not expensive sales reps. They are cross training other employees to work in the warehouse too so they don't have to hire outside people.
They had to get the crazy high interest loan in the late 3rd Q for working capital. That added almost $100K in interest to expenses in the 4th Q. It's completely paid off and there will be much less interest in expenses in 1rst Q.. They did though get $250K in a short term loan at 8% from the Board of Directors recently but there is NO options involved and they intend to pay if off over the next few months. NO conversion to shares. They don't intend to dilute and the Board is supporting this decision yet still loaning money at very fair interest rates. This money is not being used for anything else but paying for their supplier to build scanners for them in increasing numbers to satisfy demands.
There were 2300 7ci scanners sold in the 4th Q. My projected number was 2450. I've come to realize that my tracking of scanners is pretty accurate but is a bit high on my estimate of international sales. I will adjust for it. I've estimated that they receive $200/7ci unit from distributors. The CFO said this is accurate. All orders go through distributors including large orders, as such the 3200 order was for $640K. This is NOT the only large order coming but they are not going to elaborate on the future right now. Also, this order is only part of a larger order----it is a "trial". If the major Japanese company likes Fujitsu's point of sale system and scanners in their trial, they will roll it out to all locations which is "substantial". Something to note---- ONE order in 1rst Q for 7ci scanner was for more than all of 4th Q combined. Wait till this thing is hitting on all cylinders for scanners in the future.
Somo---the transition has been harder than they expected. What hurt them is prior customers of the Somo 650 stocked up heavily when it was being discounted and new customers got concerned with the whole hang-up on Windows 6.5 vs 8.0 and how it would affect them going forward as far as support from Microsoft. Now that they know the operating system is good for 9 years from Microsoft, it should open them up to more orders. I'm going to look at the 655 from now on as more like the 7ci than a continuation of the Somo 650 model. It needs to build new developers and prior customers will trickle back. Growth will be steady going forward but it's best to be conservative. The only thing that could make a real impact is Alere/Epocal. They used to be Socket's #1 customer and bought $500K worth of Somos per quarter. The Epoc blood gas analyzer has been a slower seller and, as such, they have surplus 650 units to still use up. What's interesting is that Alere just bought the remaining unowned part of Epocal for $166M earlier this month. Epocal just got more blood tests approved by the FDA for the unit. Alere obviously sees a future here. Socket has a great relationship with Epocal but who knows for sure when this will kick back in. Alere reports tomorrow and I'll be listening to the conference call.
$3.5M in "shippable orders" stated so far for the 1rst Q. This is all product that has cleared the distribution channel, the whole order for Japan, and all product orders to distributors for the next couple of weeks that need to be delivered and are expected to sell shortly. What it does not include is most of the orders to distributors for the month of March. Whatever is sent to them and sold through the channel will also be added to the total. Two things work here---March is the strongest month of the whole quarter. The second thing is I've found that scanners sell very quickly once they are in inventory at distributors. They are actually running behind (ex. have a backlog of 138 7ci units that have been ordered at Ingram and are waiting for delivery from Socket).
1rst Q estimate based on knowledge to date: Service/OEM can be fairly estimated at $300K (was $400K but we will be conservative), Somo: I put it at $1.2M. This is up from 4th Q (which they stated in the cc call it would be) but is still pathetically low (even lower than the $1.3M from 3rd Q and much less than $2M+ historically), profit margins around 39% (historical number), expenses very similar with $1.70M including interest and everything. All of these numbers are very fair. The key then is what will scanner sales be. Right now I put it at $3M based on the large deal, and what I've tracked so far in Jan and Feb (and comparing it to numbers I've had before) and projecting forward for the rest of Feb and March.
($3M scanners + $1.2M Somo +$300K OEM/Service) x 0.39 Profit Margin - $1.7M expenses = $4.5M revenue and net income positive by a little bit.
I am now starting to track Somos and will see if that number can be increased as time goes by. I will know more about scanner sales as Feb plays out and March develops. I'm going to be conservative in my estimates from now one for certain.
2nd Q on: This company can continue to grow scanners to new records every quarter so even if Somos stay pathetic forever, they will become nicely profitable. 100 Point of sale systems in 19 countries including most of the "big boys" will add up especially as most of them have hardly even started to push their product. If Somos ever kick back in again, they will become grossly profitable.
My enthusiasm was skewed towards the 4th Q by statements other shareholders made to me that I now question to be truthful. I don't intend to make this mistake again.
Dave
bbotcs....SCKT...I will talk with the CFO tomorrow directly. I have an e-mail in to him now and will follow that up with a phone call. The 4th Q was disappointing. I know I got my enthusiasm got ahead of the game and perhaps because of it overlooked some warning signs I shouldn't have. But there are two things going forward that matter a lot that are positive.....
1. Expenses are now at the lowest they have ever been in company history and they are committed to keeping them low. This is very valuable going forward. It really is.
2. Scanner sales were a bit lower than I expected. It's ironic in that $1.5M is exactly what I calculated (assuming 60% domestic and 40% international orders). I just assumed I was not able to see all of the N.A. distributor sales and so I made the incorrect projection of scanners being at record levels ($1.7M and above).
Posivive things: The scanners are going to be record levels every quarter from here on out. That hasn't changed. The Japanese order for 3200 scanners is just a "trial" for a larger order of substantial size---I will let you figure out the size of that one but I've hinted about it to you in the past. The CEO said there were multiple other large orders out there. Fujits, NCR, Casio, Panasonic haven't even begun to really sell their products. 100 POS systems haven't even started to really ramp up yet in scanner sales. The scanner future is just beginning.
Negatives: It's the Somo PDA. $900K in sales n the 4th Q is not acceptable. I will talk to the CFO about it more. When they went from the older 650 model to the 655, this transition is lasting longer than I expected. I can't track Somo sales well at all so this will always be an unknown factor in any analysis I do.
I will talk to the CFO and find out exactly how the $3.5M in shippable orders is broken down specifically that has already been booked for 1rst Q. I know there is a difference between "shippable" vs "sold and booked for revenue". I also know that just about every scanner in N.A. that makes it to the distributor is getting sold immediately. They actually are having problems keeping up. I don't need the company to tell me that, I can see it myself in the data. The Somo though is a different problem and I will find out how much of that $3.5M relates to that product.
If 1rst Q is in the mid $4M to $5M range and they are net income positive on that, it's only 1 quarter off from the calculation. It was pretty clear on the conference call that they intend to hit that target. Another reason you know they will----the CFO said that the annual meeting/shareholder vote is delayed till June. He also said that shareholders will be voting on "say for pay" and "say when for pay". If you aren't familiar with these terms than Google them. The company doesn't want upset shareholders voting on these issues. It's why, imo, the annual meeting is now in June and not April. Shareholders will start to get their proxies to vote in May (after the 1rst Q conference call in late April). If management held the vote now, they would get creamed. By May, shareholders may not be so angry.
It's ugly but not hopeless.