Nice to see some upside movement in the stock last week. We have not had a weekly gain for quite some time.
It will be interesting to see what sort of price movement we get in the stock between now and the end of Feb. I think ITI shareholders have the following two issues to keep their eyes on.
#1: PATENT LAWSUIT AGAINST PITTWAY:
This has been kept pretty quiet by ITI (not much/any mention by ITII, except in their proxy).
I heard from a reliable source that ITI is about a third of the way through a significant court trial. In the case, ITI (the plaintiff) is alleging that Pittway, a major competitor, infringed on some of their wireless patents.
What makes this case REALLY interesting is, if you recall, Pittway was the company that took the ADT business (which at the time represented about 40%, or $40 mil, of ITI's revs) away from ITI. It could stand to reason that if ITI won this case, the compensitory damages could be pretty significant, since Pittway used their own wireless/hybrid system to get the ADT business from ITI. Aside from compensatory damages, if ITI won the case, it would be quite a blow to Pittway, ITI's fiercest competitor in the wireless segment of the alarm market.
I am unaware of any more details, with respect to how the trial is going for ITII. I do know the case is being tried in Minnesota.
#2.RELEASE OF 4TH Q OPERATING RESULTS
Based on Tom Auth's comments in the last two conference calls, I would be quite surprised if ITI did not at least meet analysts estimates of $.32-$.34/share in Q4. Auth said that he expected "stable" revenues to continue through the year (Auth is a pretty conservative guy. To me, when Auth says stable, the word "stable" is not a stretch.).
ITI should show continued sales growth from new products, which were introduced mid-year. The Quick-Bridge Loop Receiver and Simon are great new products. In addition, new product introductions in '98 (ITI's Concourde and Advent lines) should help build the momentum.
For everything this company has going for it (great new products, great management, great industry prospects, great earnings power and a solid balance sheet) , it is hard to believe the market is only rewarding ITII with a stock price which is 13X expected '98 earnings of $1.73/sh.
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