Re: When? When? When?
Here's the feeling from us amateur observers:
(1) IDX is profitable in the AFIS (FBI-related) fingerprint checking field. Its tenprinter, the TP-600, sells for about $50,000 and seems to be driving the competition from the field. Today was a great day for IDX since it was announced today that IDX won the last round of a patent infringement case from one of its two competitors, DBII. The tenprinter market seems to be growing by at least 30% a year, and IDX is grabbing market share within this arena, so it is growing at perhaps 60% a year right now. We think that the stock is undervalued on the tenprinter market alone.
(2) IDX has initiated the commercial tenprinter market (a "per click" market) with Sylvan Learning Centers, which will charge $35 per use to NASD members and another association that slips my mind. This is just gearing up. It will begin contributing to earnings in a major way sometime next year.
(3) IDX also sells some control and access devices, and biometric time clocks. Its ANADAC subsidiary does some government construction work, as well. This seems modestly profitable.
(3) Computer network security market. This one includes Oracle applications. It remains to be seen how far and how fast this market will develop. It is not quite here yet, but we think we will start to see action this calendar year. Deals in this area could be quite large.
(4) Smart card applications (Point of sale transactions, etc.). This is the furthest off, probably several years. A small rival, Identicator, has been most active here, but it can provide only a generic biometric product that is comparatively unsophisticated. Good enough for piloting purposes, especially since the smart cards are not being used over the Internet, where algorithms may be picked off servers if the application is low-tech enough.
IDX revenues are growing at about 50% per year, largely due to its success in the AFIS market. That market is estimated to grow to $300 million a year in the next four years (IDX is running at less than $100 million a year right now). IDX is just turning profitable, and next year EPS are estimated at what we think is a very conservative $.18 or so. It could be a great deal higher than that if one or two deals break in the meantime.
In short, we think it's a nice time to buy. |
