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[southacresdave]

SCKT ($2.74) A company on the verge of a large turnaround?

After years of being unprofitable, they are on the verge of turning it around this year primarily cause the demand for their two main products is really starting to take off.

1. They make different types of cordless scanners that can be used with smart phones, hand computers, ipad.... (starting to be used more and more in warehouses for product tracking, from medication scanning at nursing homes, to small-business applications, etc). They are very bullish on the potential here.

2. They make a hand held computer, SoMo, that is 100% compatible to replacing the HP IPaq hand held computer. HP's IPaq is used by an incredible number of businesses around the world. What most people don't know is that HP is discontinuing this device and exiting this area of the business completely. They already are out of Japan (where SCKT has already seen new orders picking up quickly). In India and Brazil, the major distributors for the IPaq have it listed as "discontinued" on their websites and once inventory is gone that's it.

SCKT doesn't know HP's phase out schedule but they are figuring HP will be out of it all around the world by the end of the year.

Problems: SCKT would have been EBITDA positive this quarter if they didn't have problems getting LCD screens for their SOMO computers (they have no problems with their scanner products). They think they have the problems solved and can start taking care of a backlog that is getting bigger and bigger each day.

Outstanding shares: around 6M if you add in conversions, warrants, options. What's nice is that the uptick in sales could result in a nice profit/share cause of the low shares outstanding.

The company did $4.0M in 1rst Q cause of delays. They expect to break $5M (and be EBITDA positive) in 2nd Q while just starting to take down their backlog. They were actually discussing being in the $20M+ range this year in the CC call and that they feel they need to get to the $40M range to really pay back long suffering shareholders. The CFO threw out some numbers (in an answer to a caller) based on a $9M revenue/quarter---figuring it'd come in at around 33 cents/share profit.

What I also like about it is that this stock is discussed NO WHERE. You aren't buying in after everyone else. (Though that might change cause the company is in discussions with an analyst about doing a report on their potential).

Are there issues here: Sure. The company needs to become profitable soon or dilution is going to occur (and they know it, but they also know that they are on the verge of it all changing around). The company used to be worth around $160/share long long time ago so (a few reverse splits ago). On the Yahoo board there are a few long suffering grumpy shareholders (though some of them are becoming hopeful).

I posted about it cause I think it has possibilities.

Company website: http://www.socketmobile.com/

Transcript of their last CC call: http://seekingalpha.com/article/265671-socket-mobile-s-ceo-discusses-q1-2011-results-earnings-call-transcript?source=yahoo

Dave