Gerald Klauer Report posted on Yahoo thread.
Optimal Robotics+*# (OPMR)-Patent Infringement Claim Invalid, In Our Opinion-BUY
Scot Ciccarelli, CFA Deron Kennedy, CFA
(212) 885-4017 (212) 885-4064
sciccarelli@gkm.com dkennedy@gkm.com
January 7, 2000
Price: $31.25 52-Wk Rng: 40.75 - 7.00 Price Target: 52 S&P 500: 1403
Shrs Out/Mk Cap: 13.3Mil/$416 Mil 5 Yr Est Growth Rate: 50%
Div/Yield: -/- LTD/Cap (1999E): 0%
Avg Daily Vol: 130,000 ROE (1999E): 6%
Float: 7.4Mil EBITDA/share (1999E): $0.12
FY Ends -- EPS -- -- Fully-Taxed EPS* --
Dec. Curr Prior P/E Curr P/E
98A $(0.52) N.M.
99E# $0.16 N.M. $0.10 N.M.
00E# $0.50 62.5x $0.30 104.2x
01E# * $0.95 32.9x $0.95 32.9x
Qtrly -- 1Q -- -- 2Q -- -- 3Q -- -- 4Q --
EPS@ Curr Prior Curr Prior Curr Prior Curr Prior
98A $(0.12) $(0.13) $(0.14) $(0.14)
99E# (0.08)A 0.05A 0.12A 0.02
00E# 0.10 0.16 0.19 0.04
^ Intraday; @ Quarters may not total due to rounding - quarterly figures are un-taxed; * Assumes a 40% tax rate, company should become fully taxed in '01; # Diluted EPS in US$ as per Canadian GAAP; N.M. - Not meaningful.
International Automated Systems patent infringement claim without merit, in our opinion. International Automated Systems (IAUS) made a press release this morning claiming that Optimal Robotics is infringing on one of its patents. The patent in question is entitled "Automated Self-Service Checkout System." We believe IAUS notified Optimal that it was violating its patent well over six months ago. Optimal's
lawyers have done a complete and thorough review of the patent brought into question, and the company is highly confident that the U-Scan system in no way, shape or form violates IAUS's patent. In addition, there are questions regarding whether IAUS's patent is valid to begin with (i.e., whether the process itself is even patentable).
IAUS is a company with no true business, in our opinion. International Automated Systems currently generates zero revenues, despite being around since 1986, and still claims in its most recent 10K to be a "development stage company." With respect to its own self checkout system, company reports state that only one such system has been assembled.
IAUS has been plagued by many legal woes of its own. The company, its president, and his family are under SEC investigation for allegedly making false claims about the company's technology (in a field other than self-checkout), categorized as participation in fraudulent microcap schemes. In addition, IAUS shareholders filed a class action against the company in 1996 (for reasons we have so far been unable to ascertain), in which the company agreed to pay for shareholder losses and associated legal fees.
INVESTMENT CONCLUSION
This development should have absolutely no negative impact on Optimal's business, in our opinion. Optimal Robotics is an established business with many retail partners who have embraced its technology and product. We share management's confidence that the claims made by International Automated Systems are unfounded, and that the matter will be resolved so Optimal's successful growth can continue without interruption. We continue to rate OPMR BUY. |
