Hweb2....SCKT...update:
Scanners I tracked for the quarter in N.A. were $1.8M vs $1.6M last quarter. This number is intentionally conservative and, based on my history of always being at least $250-$350K low (from that conservative approach and missing sales through the 3 distributors I track, direct sales from Socket's website, not following scanner accessories at all, and a 4th minor distributor I can't follow), I'm comfortable saying N.A. scanner sales are at least $2.05M (vs $1.96M last Q). I've heard from the company that international sales did well. I know there scanners were used in more international POS systems and sold by more Japanese large retailers so I could see international sales inching up from $700K to a conservative number of $825K. I've decided a conservative number is scanners overall + misc/service (last quarter was $150K or so) for 3rd Q = $3.0M.
Somos I tracked in N.A in 2nd Q were 794 units vs an actual number of 950 units. In 3rd Q, I saw some nice things starting to happen from August on. The total I tracked this time was 992 units. I doubt I saw everything so there should be more sales on top of that. I've heard that Somo sales internationally vs domestic are "in the same ratio" as always. For 1rst and 2nd Q, that ratio was 50/50. There is no doubt the Somo side of the business is growing. This is continuing in what I've tracked in October already too.
In 2nd Q, the Somo division did $1.66M. The catch here is $300K of that was provided by an OEM medical device company who bought the "internal guts" of the Somo for their own device. I don't know who this company is, but they have European approval for their device and are getting FDA approval. They didn't buy any units in the 3rd Q, but are fully expected to be back in the 4th Q buying (and from each quarter on continuously). The catch here is if we take the $1.66M from last Q and back out $300K, that's $1.36M left. I know back in early August the idea was that the Somo could repeat 2nd Q's number even without the OEM product. I know from my sales tracking that it definitely did better in number of units sold. I'm going to be conservative and say $1.5M.
Overall, I'd take it to the bank that they did $4.5M for certain with upside potential since I like being conservative anymore. I know that they fully expect expenses to be slightly lower than 2nd Q. As such, I see continued sequential growth with continued net income positive results.
What about 4th Q and beyond?? Socket is showing that they are continuing to get traction as the point of sale industry starts to move forward (it's slower than I had expected). The number of developers is approaching 700 from what I hear. There is absolutely no doubt that scanner sales will continue to go up each quarter. The key is "at what rate??" What they need are some of the large deals that keep getting mentioned to come on top of the continued day-to-day growth.
United Van Line deal: This has been mentioned before in the cc call and by me. I have independent verification directly from Unigroup (parent company of United Van Line and Mayflower). All trucks/trailers by Dec 31rst will be fitted with a GPS unit and will be using an electronic inventory system consisting of MobileMover software, an iPad and a barcode scanner. I was told the owners of the trucks aren't excited by having to be forced to use new technology with their loading crews (they like the old paper method cause they are comfortable with it), but they won't have a choice going forward. I've researched the Mobile Mover software a lot and it's quite impressive. I was told to look for everyone to "procrastinate" and start to switch over heavily in Nov and Dec as the weather turns bad (and business slows down). I've sent this info to the CFO and he confirms it's similar to what they have been told. They are making plans to accommodate the need for a lot of units in late 4th Q. I also know that all of the sales are done through Ingram Micro and involve the 7ci unit. I can track this with a lot of accuracy as the website I use even shows expected incoming inventory. If I start to see 100+ units per day go through this channel (showing that this van line deal is going to occur for certain), I will let everyone know for sure (with links so you can track it yourself). There are over 7000 trucks with Unigroup. I also know Unigroup hired an IT guy in July to do a 9 month temp contract to deal with their new electronic inventory system and integrate it into their corporate computers system. They also just advertised for another "fleet technology" administrator 3 weeks ago and part of that job description was making sure the GPS systems are installed on trailers and helping agents with the new electronic inventory system. As such, all indications are this is going to happen in full.
The Japanese deal with Fujitsu and Yamazaki Baking Co: I've heard there have been delays in the software. The customer is very happy but wanted the software tweaked and a couple of new functions added on from the scanners. They have extended the testing period to the end of the year and expect an answer on the full contract in early January. I know from research that Fujitsu did a huge technology deal providing some device in 2002 to all of Yamazaki's drivers. As such, these two companies have a long history of working together. I'm very confident that Fujitsu can get this deal closed. That $6M would hit in 2014 then. The CFO has told me that the 3rd Q cc call is when they will give updates on all the large deals they are dealing with (and that these two are not the only ones).
I actually see good things with the Somo. The distributors I track are increasing (by 2x) the number of units they carry in stock (it's happened in the last 3 weeks). With the OEM buyer coming back, I could see this division doing $2.0M in 4th Q.
My guess right now for 4th Q is $3.1M for scanners (without the van lines added in) + $2.0M for Somo + $150K Misc/Service = $5.25M. If the van line contract really happens, then it will add on to the whole picture and revenue could break $6.0M. That would be, imo, why the CEO said in the cc call 4th Q is looking to be a "breakout". It's also why the CFO said in the last cc call that they can use cashflow to pay off that $550K short term loan they have in full. $6.0M in revenue generates around $700K in cashflow and around $550K in net income.
Who's selling and why: I'm sending you a P.M on that. I'm almost 100% certain on what's happening there. It has nothing to do with bad news leaking out. It actually is making a buying opportunity for people (as seen by the person who bought 70K shares on Friday). Anyone else can contact me directly and I will share. I also have a couple of other positive rumors I've heard too that I'll share.
Dave
