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.
