As for the particulars of the release, they said they were delivering modems for an "environmental control product" - this is the contract which was delayed since March. The buyer will be displaying it in November and if it sells only modestly well RFIL will get $500,000 - $1 million per year in revenue from it. If it sells better than "modest" then it could be sizable revenue. RFIL finally got their first purchase order for the 150mz pagers for China. These are "replacements" for the existing 150 mz market that's been there for awhile. They are preparing a 280mz model to ship in Feb or March. What RFIL wants to be is one of the first players other than Motorola and other the other big boys in the 280mz market. Link also gained some GPS unit orders - this is from a completely NEW client. Regarding the Emergency Alert System products which weren't mentioned, there's good news and bad...Bad is the FCC still hasn't determined the cable industry requirements so that's delayed. The cable industry is huge. The good news is the radio and TV regs will be even more far reaching than previously thought. So there are delays, but the market will be larger once it kicks in.
What's really important is Neulink is revving up a bit and that really brightens the picture, in my opinion.
Here's one way to look at RFIL($2.75)...Let's say the Connector Division is earning 22-27 cents a share this year. Connector has new products, new distributors, growing 25-30% year and is selling for about 10 times what it's making on a fully taxed basis. That's pretty fair. So all we need is Neulink to start making money and we get it for free. Last year Neulink did $2mil in sales, this year they may do $1.8mil, but next year should be much better. If Link breaks even at $1.5mil to $1.7mil/yr and IF next year they do $2.5 - $3mil next year, this would put the sizzle back into the story. The fourth quarter which they are in now should be okay - I GUESS MAYBE 6-8 cents a share compared to an adjusted 4th quarter last year of 1 cent. Connector is great, Neulink is starting to ship all the delayed orders... When RFIL is priced at $2.50 it's a fair price for Connector alone(10x earnings). The question is what are we willing to pay for Link? I think there's enough irons in the fire at Link to make next year pretty decent. Acquisitions are possible. If nothing else, there probably isn't much downside from this point. That's just my opinion. Chris |
