I have been utilizing Zagg for almost 3 years now. It has of course been a bumpy road but what I'm becoming concerned about is I have been hearing a consistent "wait till Hzo" becomes profitable mentality.......... If Hzo actually does get some steam behind it with new buyers and large retailers implementing this new water proofing tech into the product line........ What type of shift will we see in stock value as well as a potential buyout? Would Zagg ever sell to a Samsung, Apple, etc? Is that a possible endgame for Hzo?
Thanks for the insight.
i have seen lots of post indicating zagg is into sony and samsung tablets and phones... there is nothing in terms of public information to confirm HZO is the technology behind the waterproof claims.. yet the real contracts in place are known and included in the specs of these products Navistar and TAG... if something is indeed in place then I think shareholders have the right to know the valuation of the Zagg investment in HZO... how much is HZO worth... these contracts if any with sony samsung as some have indicated drastrically increase the value of HZO... if this is indeed the case why did zagg right down $600k against the HZO investment in Q1? I thought that the analyst would have been all over this on the earnings call.. One analyst headed down that direction but Hales refused to put a number on the valuation ... it is top secret ... give me a break. i thought the analyst were worthless on the call not sure if they just dont care or dont understand how to do their job...
Bingo, Hales shot down the line of questioning. Realize that he acknowledged it was an up round (positive revaluation) while still writing down the value. He cannot change the write downs until after the revaluation occurs.
What he did not do (that he really needed to do) was give us an update on what is happening with HzO. Even if its just 500-1000 units, the fact it has gone form pure red to SOMETHING merits discussion as it is a material thing for shareholders to know that a once written investment appears to be producing and growing. Part of Hales Kitchen Sink if you ask me.
Well here is my take. I used to think HzO was Pie in the Sky. Thing is, if you look at Sony, Samsung, et al. you will discover that Waterproofing is the cutting edge tech for this round of the cellphone wars. HzO appears to have the best tech around and it integrates well into a manufacturing process.
If they are smart, they will sell this to Samsung, Apple, or Google or at the least, strike a long term deal after the first set of product launches. How big could it be? Pretty big, if they won Samsung or Apple over they could have a product inside a 100 million phones a year. Let's say they make a $0.25 (profit) per phone protected - that would be $25 million a year. It could add triple digits to sales. Or it could do nothing if they don't get it picked up by one of the majors.
I believe all of the majors will have this tech built in within the next 2 generations of phone, not just in active user marketed phones but all phones in general. I base this on the fact that the lawsuit Apple lost a few weeks ago means they are liable for certain types of water damage they were previously claiming wasn't their problem. Apple and Samsung alone estimate water damage issues related to warranties will cost them over $600m/year. If you can BUYOUT Zagg for $150m and pickup 30% of HzO, then by default, its possible to buyout the technology with less than a one year payback period. (Note: I know how 'theoretical' and consultant like that sounded, no need to rib me on it). But even going off the extremes, it makes alot of sense for manufacturers to pick this up.
smilingwolf, I believe that Apple doesn't have a new phone out this month because they changed their assembly lines to include waterproofing tech... Time will tell if I'm right... It takes time to add that sort of tech to everything that goes into a phone and then it takes more time to test (verify that it doesn't overheat). If the next round of iphones includes HzO's waterblock technology then everyone will be looking for a way to invest in HzO and right now there are only two ways to do so... Zagg gets you the biggest percentage and TINY gets you the next biggest percentage. Zagg with nearly 23% is the best bet.
Sentiment: Strong Buy
Hi smilingwolfcapitalmgmt, I'm wondering where you got you 25 cents estimate from. Liquipel sells their coating for $60 for a phone. HZO would sell cheaper than this, but I would estimate still above $25 per device. Lets say 40% profit margin once volume is high, and that's at least $10 per phone.
I really appreciate the insight! To me..... the whole situation seems like it has been ignored or at least misrepresented over the last 12 months. To be completely honest I don't care which route Zagg takes on this ie selling it.... leasing it.... but I would really anticipate this type of information to be discussed more openly or at the very least woven into the overall 1, 2 5 year plan for the company! I want the ball to start rolling...... even if it is inches at a time!
thanks again wolf.
The HzO tech is much bigger than cell phones. Within the next ten years this tech will probably be used in all electronics and beyond. It will probably also make its way into clothing lines, art galleries and many unexpected places. I foresee many many things using waterblock technology; cell phones are just the tip of the iceberg. Eventually all high end digital cameras being protected, laptops will be protected, special purpose HDTVs will be protected, solar panels, etc. etc. Going beyond digital, several clothing lines for ski and winter wear will be protected; it may even go as far as casual wear. Art galleries may eventually coat their high end pieces with waterblock… This technology has enormous potential so Zagg's near 40% ownership could end up being worth several times what Zagg is currently worth. Selling the technology to the highest bidder would be a foolish thing to do, but licensing the technology to the likes of Samsung, Apple and others is, IMHO, inevitable.
FYI, I've been buying here near $5 and plan to buy a lot more.
Sentiment: Strong Buy