SCKT ($3.09) 52 week closing high
In the presentation to analysts on Tuesday they mentioned that HP has now listed as "discontinued" their Ipaq 200 series handheld computer in Germany and Australia/NZ. (That's on top of Brazil, India, and Japan in the last few months. By fall 2011, HP should have phased out of this product completely around the world).
SCKT saw their sales of their SOMO handheld computer go from a few thousand to over $500K in Japan alone (during 1rst Q) after HP exited (Their SOMO product is 100% compatible). It is very expensive for businesses to switch their software around and is easier to just keep buying similar hardware.
They are bringing on a second source for LCD screens (they mentioned they are looking at samples this week) and, as such, will be able to catch up on their backlog by 3rd Q and to aggressively pursue opportunities in countries where HP is exiting. (SCKT outsources the production of their products, as such, their SG&A is rather fixed. Management sees gross profit margins going to over 40% in the next couple quarters).
SCKT should be EBITDA positive for 2nd Q and net income positive from then on. That's on sales of $5M/quarter for 2nd Q. It won't take long for them to double that picking up some of the business that HP is leaving from---HP will eventually exit 138 countries. As SCKT picks up this business, their low outstanding shares, huge tax loss carryover, and fixed SG&A should allow net income to grow substantially.
All just my opinion.
NOTE: Shares are hard to come by.
Dave
