ADSX news SCREAMERS
Applied Digital Solutions on the move
Stock above $1 for first time in 11 months
By Michael Baron, CBS.MarketWatch.com
Last Update: 3:14 PM ET April 16, 2002
NEW YORK (CBS.MW) -- Applied Digital Solutions' shares soared more than 25 percent in afternoon action Tuesday on astronomical volume of more than 45 million shares.
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The interest in the stock (ADSX: news, chart, profile), which broke above $1 for the first time since May 30 of last year, put the Palm Beach, Fla., developer of what it calls "life-enhancing" technologies in third place on the Nasdaq's most-active list, just below technology heavyweights WorldCom (WCOM: news, chart, profile) and Sun Microsystems (SUNW: news, chart, profile).
The shares recently changed hands at $1.13, up 23 cents.
The company hasn't issued a press release since last Thursday when it announced that it would post positive EBITDA (earnings before interest, taxes, depreciation and amortization) for the first quarter. At that time, the stock was trading at 66 cents per share.
Earlier in the month, Applied Digital disclosed that the Food and Drug Administration had determined that its VeriChip product wasn't a regulated medical device, clearing the implantable radio frequency identification device for sales in the U.S.
The company envisions VeriChip will be used for a number of security, emergency, and health-care applications. The dormant VeriChip is the size of a grain of rice, and it's activated by a proprietary scanner that reads a verification number, leading to access to information of the subscriber's choice, such as medical records.
Restructured
Scott Silverman, Applied Digital's president, told CBS.MarketWatch.com that he thinks the stock's recent jump results from a number of moves to restructure the company and place its focus on wireless medical and security products, rather than providing telecommunications infrastructure equipment.
He noted that the company sold 26 business units over the past year, and realized a gain on its original investment in Digital Angel as a result of that unit's merger with Medical Advisory Systems. Applied Digital owns 82 percent of the combined company, which now trades on the Amex as Digital Angel Corp. (DOC: news, chart, profile). All of these events, as well as execution, are expected to give Applied Digital positive earnings for the first time in two years.
Silverman also pointed to recent media coverage of the company's products as positive catalysts for the stock price. On April 5, the VeriChip product was featured on NBC's "Today Show." Company executives appeared with a South Florida family that will be the first group to receive the device.
VeriChip is expected to provide revenue in the current quarter, according to Silverman, who explained the company's three-pronged initial marketing approach. Applied Digital has been marketing the product in South America, where it has seen interest due to safety concerns about kidnappings.
Ready for U.S. sales
Now that the product is cleared for sale in the U.S., the company plans to ramp up marketing on its home turf of Florida with a focus on the considerable elderly population in the Sunshine State. The product will be offered through doctors but the company eventually plans to develop a distribution system that would license clinics to perform the implantations.
Also on the radar as a target market are extreme sports enthusiasts who have expressed excitement about VeriChip because they often engage in dangerous activities in out of the way locations. Silverman said VeriChip has been appearing near the top of search-engine keyword lists for the past few weeks.
Asked about a price point for the subscriber aspect of the VeriChip service, Silverman said that Applied Digital hadn't determined one yet but that it would be well below the cost of a cellular phone.
"We're looking at right around $10 per month," he said.
Applied Digital is launching a Global VeriChip subscriber registry service on May 1 in conjunction with Digital Angel, which is making available its proprietary biosensor technology and its FDA-compliant physician call center.
On April 1, Applied Digital reported a loss from continuing operations of $198 million, or $1.23 per share, in 2001. These results included a charge of $128 million related to asset impairment, phase-out costs and restructuring. Revenue for the year totaled $156 million, a 16 percent increase from $135 million in 2000.
Michael Baron is a reporter for CBS.MarketWatch.com based in New York. |
