John - Its has been a year, let's update your INFS Project Hunt Report in which you proposed them as a King not a Gorilla, because "they offer a product, not an enabling technology".
InFocus had a solid year of progress in 2000 and pretty well tracked your numbers. For years I had a position in this as my one 'Growth at a Reasonable Price" technology stock and, really appreciated your summation last year:
> Contrary to some on this board, I believe it IS possible to pay too much for a
> Gorilla or King. Valuation still should play a part in our decision to buy.
> For Gorilla/King investors interested in getting into companies at
> "reasonable" P/S and P/E ratios, INFS may fit the bill. It has a legitimate
> claim on Kingship in a fast growing market, with some interesting patents in
> several areas of applied optics, both in their "kingdom" and in related areas.
> The related area patents have the potential to generate additional substantial
> revenues. On the strength of the growth in their sector alone, the current
> price appears very reasonable.
Do you still feel this way, John ?
INFS currently is trading at 15 times last year's earnings and is down about 10 points from last year at this time. The continue to be debt free and at year's end had $86 million in cash and cash equivalent on hand. And, Management has firmly predicting that earnings will be moving up again this year.
1. Their merger with Proxima seems have gone very well (sales and earnings from ongoing operations were up about 30 percent). They continue to be debt-free and continuing to gain market share.
2. Your report mentioned their patents. Last year saw considerable success in turning their IP into a revenue stream. In March they licensed their Merlin technology which is protected by two patents to PXLW in exchange for $2.4 million plus 156,863 shares of PXLW currently worth about $2 million. The Merlin technology allows a digital projector or display to correctly process analog signals.
According to a March 17, 2000 Business Journal article, InFocus has converted their Motif joint-venture with Motorola from a manufacturing to a technology development relationship. Motif is focused on technology that increases the performance of of displays used in cellular phones and personal digital assistants such as Palm Pilot products.
Then in August they licensed to TXN a similar but more advanced IP technology - Kestral:
> in which Texas Instruments purchased the rights to embed proprietary InFocus
> technology in its Digital Light Processing™ (DLP) technology solutions. DLP™
> technology serves in a variety of applications, providing flawless image
> quality for data/video projectors, video walls, large venue projectors, home
> theatre systems and other display products
The TXN agreement involved an unspecified one time licensing fee with ongoing royalties. And INFS and TXN agreed to expand their ongoing codevelopment efforts aimed at creating more functional and less complicated Digital Light Processing technologies.
3. They are entering the Home entertainment market this Fall, with projectors offering single-wire connectivity to either a Television, HDTV, video & DVD player, digital camera or computer. The company has stated in a CC that this move will effectively "double their addressable market".
4. Waiting in the wings so as to speak is their investment in Colorado Microdisplay, (http://www.comicro.com) and the production start-up of their Shanghai General Electric joint venture in China.
Thanks again for all your work on this Project Hunt and I am looking forward to seeing what other thread members might add to this picture...
--alan |
