Virtual wire radio:
It is a pair of trasmitor and receivor of RF signals. It is used to replace existing wire connection between a terminal and the controlled machine, mainly for industrial or office usage (such as use for wireless key board, remote machine control, wireless bar code reader etc.) to increase operation efficiency.
So far in the last year, RFMI has sold 700 virtual wire development kits (1st Q & 2nd Q about 400 kits, 3rd Q 200 kits and 4th Q 100 kits). The company is hoping that the strong order for the kits will translate into large scale production orders. However, according to conference call, nothing happen yet.
As a stock holder, here come down to this: Do you believe virtual wire will be big in the near future (say in next 6 month)? If not, then take your money and run (looks like many people are just doing that). Because RFMI can not grow too much on Automobile segment alone.
The analysts who follow RFMI all valued the company at about 20 to 25 times earnings. Value line special situation lowered RFMI from strong buy to buy/hold three month ago (about $20) based on valuations.
RFMI is doing wonderfully on Automobile segment. But The clock segment is almost dead. Virtual wire (the next big thing for RFMI) is not a sure thing yet. Automobile segment face more competition as the market getting bigger, many non traditional RF supplyers getting into the game. Telcom segment although is growing, however, it only count a very small portion of RFMI's revernue.
I will consider re-invest in RFMI when one of the two thing happens: (1) valuation become reasonable or (2) virtual wire segment become less virtual.
wang |
