Hi Sector,
I'll take a shot... first, I'll note that there have been no press releases from KVH, other that quarterly reporting and a personnel announcement, since July 18th. Clearly, there may be issues involving national security regarding some products.
Several things could happen at any time.
1) Announcement of the Current Sensor product shipping for revenue and the identity of their partner, who Martin said in the last CC is one of the top three electrical equipment providers in the world. Such an announcement is expected sometime in Q4. GMs for this new product were stated by Martin to be in the 50%-60% range in the last CC, and because all the sales are to one customer they don't have significant advertising/marketing expense, so this will be one of the highest profit products KVH has.
This is the kind of solid business needed in times like these... unspectacular, but solid. Given KVH's conservative nature, I expect this to become a large part of their business. Martin has a history of delivering on his promises in a timely manner, and I expect that will be the case this time. Sales of a new product take time to ramp up, but this is a good place to be, IMO.
2) Announcement that the new optical modulator is available and being tested. This is expected by Q1 2002.
Once again, the schedule announced. Who is the potential customer? ...that is, with whom can we affilliate KVH's future in this venture? KVH always talks with industry when developing a product, so I would certainly expect that to be the case this time. Who it is will likely be as important as the technology.
3) Announcement that the Mobile Broadband product is available. This is also supposed to happen by January. Per the CC, it should be in testing right now.
Defining the product and the market will be important. The initial release will likely be for minivans and SUVs. Child entertainment will be desireable during errands and trips. Road trips may become more prevalent.
4) Announcement that KVH is returning to profitability. This is expected by Q1 2002 or earlier.
No comment needed, although an early arrival of profitability would be a pleasant surprise.
5) Announcement of new significant military contracts. The Digital Battlefield Initiative contract has been awaited for some time now. They were apparently close to getting it, as Rep. Kennedy put out a P/R on it, but for some reason (probably Clinton military cutbacks) KVH hasen't received the contract yet.
The 9/11 tragedy and the increased funding, plus TacNav now being "designed in", plus recognition by the military that GPS can be blocked by an enemy, practically guarantees that KVH will get this contract. Rep. Kennedy's P/R valued the contracts at $95 million. Last year, military was only $12 million or so of their $30 revenue. A major contract like this could significantly change this for 2002. Here was the Rep. Kennedy P/R from 1999.
house.gov
Take your pick. Any one could move the stock, but ALL are expected to occur soon.
I, too, expect the military side of the business to pick up, but I expected that prior to the WTC attack. The military side of the business could take more of KVH's attention than anticipated, but shouldn't significantly delay any of their other initiatives.
My final comment will be a repeat of the first. If you notice, each of your 5 points start with Announcement. The reason the stock price is where it is, IMHO, is, at least partially, that we haven't heard anything from them in an entire quarter. I'm not suggesting that they put out PR just to say 'Hi', but a company that derives its stock price from future prospects, things in development and initiatives that are controlled by their secret partners, leave KVH investors in the dark. In a market like this, it's easy to lose one's patience with a dwindling stock price, regardless of the potential.
I'm not complaining, but lack of communication isn't helping our stock. Too bad there's nothing to say...
Long,
Roy |
