During the 4Q and FY 2013 earnings call LTRX said, "The Company is in a transitionary period during which it is pursuing a strategy of increasing revenue by expanding sales channels and regularly releasing new products with the expectation that, in the long-term, new product revenue will significantly outpace the decline in mature product revenue. The Company believes that this strategy will ultimately result in the improvement of gross margin, GAAP net income and non-GAAP net income." The company updated the target model that it previously disclosed.
The company's 3-year target for gross margin as a percentage of net revenue is now 49 - 51% and its 3-year target for non-GAAP net income is 8 - 10%. This is consistent with their July 3, 2013 company presentation which states that in 2014 they expect 3% non-GAAP net income on double digit revenue growth as they keep executing their growth plan established in early 2012 with the new management team.
The company expects a strong 1Q 2014 to be reported in mid October as they expect "that gross margins will return to normal and revenues for China will start making a significant impact.
If they meet their 3 year target, revenues will reach $65 million, GAAP net income would be about 4.5mil which equates to EPS of 30cents....PE of 15 would be $4.50 stock price. PE would be justified based on prior year's revenue growth and an improving balance sheet as earnings increase yearly.
The US Patent Office published that LTRX has been granted 71 patents for M2M products/applications/services since 1987. Several more patents are at various stages of approval.
At present, M2M market penetration is in its infancy (only about 1%). Analysts estimate that there are over 50 billion connectable machines today. With the explosive growth in smart phones, cell phones, tablets, sensors, and other devices,
LTRX has positioned itself to capitalize on the growing demand in the M2M connectivity market.
LTRX market cap is only $28 million dollars on revenues of almost $50 million dollars, if one excludes its cash, the stock is really trading at $1/share!!! The float is only 5M shares due to persistent insider buying and heavy institutional buying.