Value Microcaps Motherboard

[whyme2005]

HAUP $5.7...Deal with Replay TV could be huge...

As it does every year at this time of the year, HAUP (Hauppauge Digital, Inc.), is starting a rally that usually lasts until February (see the weekly chart which is the lower of the two):

http://stockcharts.com/gallery/?haup

This year HAUP started to go up sooner than usual because of stronger than expected 3Q 2006 results. The uptrend was temporarily broken, but last week it regained most of what was lost on relatively high volume.

HAUP's deal with ReplayTV could be a big deal....and it appears that it is also a big deal for D&M Holdings, a japanese multi-billion dollar conglomerate that owns Replay TV. D&M focuses on the home media/entertainment segment.. D&M owns industry flagships such as Denon, Marantz, McIntosh, Boston Acoustics, Snell Acoustics, Escient, and Replay TV.

Replay TV is a big part of D&M current and future growth plans. So much so that D&M's mentions Replay TV, and Hauppauge Digital, on page 34 entitled "Growth Opportunity" of its 58-page November 16, 2006 "FY2006 Interim Financial Results." Why would D&M mention this opportunity if it did not mean megabucks in its future?

Here is the link for D&M's PowerPoint presentation....look for "Latest Presentations" in the middle of the page.

http://www.dm-holdings.com/eng/ir/

Now take a look at Replay TV's website....look for the title "How do I Control it?".....and you'll see Hauppauge's name prominently displayed.

http://www.replaytv.com/tv_on_my_pc.asp


Expected HAUP catalysts for the next few weeks besides the Replay TV bonus:

* HAUP usually unveils several new products at this time of the year. The CEO already said that will release several new products in coming days/weeks. A product release a year ago lifted the stock 45%.

* 4Q 2006 and FY 2006 earnings to be released in December will show a 20 - 30% year over year revenue increase per CEO's comments last month during the annual meeting. Net income reported for the first 9 months of 2006 is 25c/share, almost doubling the 14c/share reported for all of 2005.

* HAUP usually goes up big during the Consumer Electronics Show held yearly in early January in Las Vegas, Nevada.

* HAUP reports its biggest quarter of the year in February. The first quarter of every year reflects Holiday sales. This year the company expects strong sales of some of its key products.


Interestingly, on 11/20 CEO Plotkin filed that he has acquired 200,000 HAUP shares at $4.96. He now owns 958,000 HAUP shares....or about 10% of all outstanding shares.


This year HAUP is stronger that ever:

- Highest revenue and net income in company history for first 9 months of 2006. Revenues of $76M in 9 months compared to $78M the previous year. Nine month net income of 25c/share compared to 14c/share for the previous year.

- 90c/share cash

- Zero long term debt

- Strong and diverse array of quality products gaining market share worldwide thanks to the simultaneous boom of HDTV, broadband usage, and computer power.

- Strong already in the US and Europe. Gaining market share in the lucrative China/Asia market

- Many recent OEM deals with quality companies like Microsoft, etc.

Even after last week's gain, HAUP is only trading at an undervalued P/S ratio of 0.6......Projected 2006 revenues of $90M+ and only $50M market cap!!!!


Last month Kenneth Plotkin, the Company's Chairman of the Board, Chief Executive Officer, President and Chief Operating Officer said that the Company expected net sales in excess of $90 Million for the fiscal year ended September 30, 2006. He also said that based on certain sales channel market information currently available to the Company, sales of the Company's WinTV-HVR 950 hybrid video recorder product were expected to be relatively strong for the upcoming holiday season. As a reference, revenues for 2005 were $78M.

The Hauppauge WinTV HVR 950 is a small, compact USB device that is capable of viewing and recording both SD and HD TV. The HVR 950 is that it is a self powered USB device. It does not need an external power source to operate, and also comes with a small TV Antenna that is capable of receiving SD (NTSC) and HD (ATSC) over-the-air signals. It is also capable of receiving other NTSC signals, which allows one to view the cable at one's residence.

In the most recent 10Q, the company stated: .."Our R&D departments in New York and Taiwan have been teaming together to deliver an impressive series of new products, including two new multimode TV tuners, the triple TV format WinTV-HVR-3000 and the quadruple TV format WinTV-HVR-4000. The WinTV-HVR-4000 is Hauppauge’s first product with high-definition satellite TV reception. In addition, two new dual tuner digital TV receivers, the WinTV-NOVA-T-500 and the new WinTV-NOVA-T-USB2 diversity digital TV receiver, were introduced. Together, the R&D team is scheduled to introduce 20 new products in fiscal 2006.”


Always do your DD and invest at your own risk.