Title :TRUETIME INC. / Santa Rosa, California - Precision Products Maker Takes No Time Outs
Date :02/07/2000
Author :Catherine Lacoursiere
Copyright :Investor's Business Daily
TrueTime Inc., a maker of precision timing and synchronization products, could be in the right place. But as the company knows, it's more important to be there at the right time.
As the world builds out the digital economy, timing will be everything. Broadband networks, cellular phones, online services and computer networks all rely on sophisticated timing technology.
And as networks become faster, precision will be key to ensuring the digital economy rolls along at a steady clip.
"Timing is driving the convergence of wireless and data," says Michael Von der Proten, chief financial officer of TrueTime.
Seemingly invisible, timing devices are the heartbeat of the electronic world. The call-per-minute breakdown on a cellular phone is clocked by a time stamp by TrueTime or one of its competitors. Online services such as America Online Inc. with large numbers of time-sensitive users rely on similar technology to track their subscriber usage.
Computer networks require time synchronization devices to enable them to communicate effectively. And more accurate timing is key in the ability to move more information through fatter pipes in the migration from narrowband to broadband. Depending on the application, some devices are accurate to 40 billionths of a second.
TrueTime's core market has been aerospace, government networks and defense. It receives its time reference from global positioning system satellites. Its timing technology produces the most accurate global positioning timing receivers in the world. This market is forecasted to grow from $209 million in revenue in 2000 to $360 million in 2005, a 15% increase.
Now they are adopting an e-strategy, pursuing opportunities in high-growth broadband and digital cellular networks.
"They know how to build on profitable bases," says John Todd of CE Unterberg, Towbin. "They are focused on a number of highly profitable opportunities and they know how to exploit those on a profitable basis."
Its computer networking division is at the core of its e-business strategy and currently accounts for 10% of its business. As more business processes digitize the market should grow exponentially. The National Association of Securities Dealers, for instance, requires that all computers are accurate within a few seconds of one another so it can monitor when trades are entered.
"This is the fastest growing sector of the market," says Von der Proten.
But TrueTime's competitors also plan on doing business in Internet time. High-end player Datum has recently made several aggressive pushes into the e-business market. Last year, Datum bought Digital Delivery Inc., a provider of secure information and product distribution software, in an effort to become a larger player in the business-to-business e-commerce market.
At the same time it started an e-business Solutions division. These moves were intended to position it as a first mover in offering certifiable time stamps for electronic transactions over the Internet. The company suggests the application could be valuable in stock transactions, invoice payments, digital signatures and document filings.
But Datum also has run into a few glitches in the digital domain. The company has been busy trying to stem losses in its wireless business and turn the corner to profitability.
At the same time, Symmetricom is positioning itself as the low-cost provider of timing systems for high-speed services. The company is presently the market leader in providing timing solutions to service providers including Internet service providers, small local carriers and cable and wireless operators.
But TrueTime is hoping to change that. It has been introducing new products in the network market ranging from new technology for synchronizing clocks across networks to providing remote access to communicate with TrueTime devices over a local area network or the Internet. TrueTime says it intends to make further announcements regarding the expansion and development of its e-business line soon.
Its newfound status as a pure play also should give it a boost. On average, spin-offs do well long term as they start to benefit from the perks of going it alone such as institutional coverage and leveraging entrepreneurial cultures.
TrueTime's spin-off from its parent company through an IPO in December should help unleash its true value.
"It did not get the investment and attention that could accelerate its growth to levels we hope it can achieve," says Glenn Powers of Cruttenden Roth.
Prior to the spin-off, TrueTime registered five years of profitability as an independent subsidiary to its parent. At fiscal year ended Sept. 30, the company posted $21 million in sales, 27% higher than the year before. It earned 57 cents a share, a 42% increase over 1998.
First Call estimates 2000 earnings will dip to 42 cents, but then rise to 55 cents in 2001 and 70 cents in 2002. The company trades under the symbol TRUE around 12. |
