SCKT...it's eligible for the board again after 2Q numbers
It's one to keep an eye on if 3rd Q scanner numbers grow sequentially again. The company has a track record of disappointing investors, but that could be changing here with the expansion of retail tablet and mobile POS. In all likelihood it's only a matter of time before scanner numbers starts to break $4M/Q and then $5M+ in 2015. Here's a copy/paste of a post I put up on Yahoo last week:
"Important differences between 2Q 2013 and 2Q 2014 = future of Socket
Both quarters came in around $4.4M so on the surface it looks like flat growth. So what's there to be excited about?
Scanners: $3.6M vs $2.6M. The market is finally starting to ramp up with scanner's numbers of $2.4M, $2.75M and $3.6M in the last 3 quarters. It's important that this number keeps growing. The number of developers last year to this year grew from 500 to over 1000 now. That alone points to stronger and stronger growth as they put out their software applications and those applications grow in size and popularity.
Gross Margins: Increased from 40.7% to 43.3%. The margins have been going up as the number of scanners sold go up. It's simple-----the more units you order from the manufacturer, the lower the cost per unit becomes because of bulk pricing. It's a two-fold winner = more scanners sold + more profit per scanner. In time they should be 45% and above.
Expenses: $1.753M in 2013. $1.8M in 2014 (with $60K one time charge for the new interest rate which will lower expenses more). This shows that management is holding the line on expenses. It was good in the cc call that Kevin said they will continue to do this. It means more money will flow to the bottom line in the future as growth increases, margins increase, but expenses stay flattish. It's where the real leverage in the future for net income growth comes from.
What matters most to those reading this.......stock price. It hasn't changed much. However, if they can grow scanners sequentially in 3rd Q (even with Apple issues in Sept) and beyond, then the stock price will take care of itself. Higher revenue, higher margins, fixed expenses, low # of shares (even with full dilution) will put a lot of money to the bottom line. There is no doubt it will happen (1000 developers and growing ensures it plus a POS industry that is taking over the retail industry), the only question is how fast and how much and what time frame?
From company in response to some questions I had with them: The most important change we saw in Q2, as mentioned in our conference call, are adding a few larger deployments to what has been until now primarily a run rate driven business. Based on our general discussions with many of the larger registered software developers, larger deployments are still at a very early stage (those closing in Q2 got started typically over a year ago) and the growing business interest in using Apple and Android Smartphones and tablets in mobile point of sale and commercial services applications as reported from time to time by Venture Development Corporation has the potential to dramatically alter the mobile application landscape over the next several years to Socket’s benefit.
