Where are we now?
Industry: The biometric industry is far further along than it was eighteen months ago. Many more startups, many more pilots and investments in collateral infrastructure by major companies in bio-ID. Prices have been coming down. Progress is being made on a common API. The industry momentum appears to be strengthening. This means there are good long-term prospects here.
Identix overview: This company has the broadest reach -- from AFIS to access control to computer sign-ons -- of any in the marketplace. Its alliances are extremely valuable. The management has maneuvered within the nascent marketplace better than its competitors, and Identix is self-sustaining in revenues.
Identix presently: Has a strong, albeit not exclusive, position in the AFIS field and ANADAC appears increasingly profitable. These two groups provide a stable financial base for investments in bio-ID and potential acquisitions. The Identicator purchase looks better every day, and Compaq is in fact selling product. The F3 line has yet to come through with a big deal in computer networking application. In fact, it has to be rated a disappointment so far. Multiple bio-ID pilots provide potentially big payoffs down the road.
Identix near-term: Identicator purchase must be digested. Further, Identix must use both F3 and IDT technologies to improve each line. I don't believe we'll see large profits in the next quarter or two; even if O'Hare or another pilot hits, profits will come later.
Identix medium-term (six to eighteen months out): Revenues should begin to take off in ANADAC and bio-ID, with both top and bottom lines showing the change. Probability of roll out of some of the ongoing pilots. AFIS market should continue as profitable. I predict an IDX acquisition of a VPN company (probably Internet Dynamics) in order to fill in a gap in the product line. (I think Oracle handles this area in certain F3 applications.) All biometrics should get a boost with the adoption of BioAPI. If someone is going to acquire this company, this is the time frame to worry about -- with an obvious marketplace and accepted products just beginning. IDX could be taken out somewhere just over $30/share. Many newbies appear on the SI board and you don't even want to think about what the Yahoo board would look like.
Identix long term (more than eighteen months out): If Fowler/Pieper perform well, this will be a hot stock, with revenues rising by 100% to 200% a year, good profits, and a very high multiple. Revenues could jump even higher if Mastercard buys 50 million scanners from Identix. (My dream scenario.) At this point, takeover fears should recede. |
