Was at Gentex Thursday. Here are the highlights:
Update on North American penetration rates:
Cars - interior mirrors 7%, exterior 5%
Light trucks - interior 18%, exterior 4%
Will pick up close to two dozen new programs for model year '99 and 3 dozen in MY '00. A "program" is the interior or exterior mirror for any model. The interior and exterior on the same model would be two programs.
Are at an annual sales run rate of close to 1 million interior compass or compass/temperature mirrors. I did not realize how popular this configuration was.
The company is looking in many new directions and may eventually address another market other than mirrors with its "vision"-related technology (the stuff it's working on with Photobit). Certainly things like obstacle detection and collision avoidance are mirror applications that would be possible with the "camera on a chip" technology Photobit provides. Future opportunities for this, non-mirror applications and other things like electrochromic
windows are looking brighter as evidenced by the number of patents the company has filed, which ran in the 5-7 range until last year, then rose to 15 and will be close to 20 this year.
There is also a nice catalyst to look forward to is still several years out. The feeling is that within several years, aspheric mirrors will be allowed on the outside of cars in the U.S. They are currently only allowed in Europe (well, maybe Asia too - I don't know). The issue stems from two things. In order to change the law that prevents aspheric mirrors, you need to accumulate a lot of data supporting the argument of safety and other benefits
before a bill can be presented. A major study on this issue is due early next year. In addition, there are questions now about who would be liable (driver, auto maker, mirror maker) should an accident happen because people aren't acclimated to the new mirror. But it's something to keep in the back of your mind because aspheric mirrors carry a much higher price than flat glass (driver's side) or convex (passenger side).
Finally, the GM strike could really have a significant short-term impact. It will likely hurt the June quarter by .04 and will dip into the September quarter if the strike is not settled in the first two weeks. I'm sure that is why the stock has been weak. But we should all remember that the strike is a temporary issue that does not affect the demand for this product. I am expecting GNTX to earn $1.60 in '99 and even if GM were idled for the
entire September quarter (that won't happen), it doesn't affect how many cars are sold in '99 and how many have GNTX mirrors on them. It is just lost production that is water under the bridge. So, I would take the opportunity to scoop up a little more of the stock if it falls to $30 or lower. I will.
Turs
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