Numerex has a lot of competition. ORBC is launching satelites and every ship in the world will use their service. They can easily adapt the product offering to anything that moves. The stock is also very cheap and has lots of cash. I have watched numerex for almost 18 years and they are always just a step away from success. They just cannot bring the money down to the bottom line. I sold it years ago when I learned of the sketchy record of the CEO. As you may know he had a severe brush with the law and did some hard time. I am always nervous when the top guy is not sqeaky clean. Maybe he has redeemed himself but----. I know he keeps getting more and more stock.
The most awful issue is no income growth on 25 % subscriber growth. Somethingis mighty wrong when you can't grow non Gaap earnings with more revs. I note the sg&a was up a ton-- is that more comp or more sales guys.
I took a look at ORBC. After cursory examination it appears that this company is similar to NMRX in it's offering of world-wide satellite-based communications supplemented by CDMA SMS service where available. Comparing the stock of each company as far back as 2007, NMRX is about even, whereas ORBC is down about 60%. Q3/11 revenues and margins seem similar - the big difference is ORBC has issued 45m shares against 15m by NMRX - the relative current stock price of the companies appears to reflect this difference. ORBC is worth watching.
The issue of Stratton's long-ago brush with the law has been raised here occasionally over the years. The Board was aware of the matter when they elected him CEO. I think it was an SEC issue and had something to do with investments by a company in which he was involved. I could not find any specific references again, but I believe the matter was concluded with a financial penalty with no jail term.
In any case, I'm sure that there are other investments I could have made that would, over the years, have returned more than have NMRX - but that's hindsight. Following the stock has become a hobby.
This is a low-cap stock - and volatility like this goes with the territory. All the years I've owned it have seen sharp rises and falls on very small volume - today the trading was only about 21% of the daily average.
I listened to the conference call replay this afternoon - if you haven't, go to the web site and listen to the Q&A part, about 1/2-way through the tape. Stratton mentioned many of the 50 or so vertical markets in which NMRX is involved, among them are: auto insurance (monitoring drivers' habits allows for discounts for safe drivers), the subprime used car market (protecting lenders' investments), real estate (electronic lockboxes on for-sale properties), security monitoring of various types, medical device and health care monitoring, and broadband m2m, as well as a new, fully-integrated platform for VAR applications. He didn't mention the tracking of non-disposable cargo pallets worldwide, which I think should be a popular application.
I finally finished reading the CC transcript. Frankly, Michael_in_atlanta, I was underwhelmed. The CEO has claimed these great opportunities and '50 verticals', and so on, but somehow they never seem to translate into meaningfully higher revenue and earnings. Q4 revenue was flat year over year. So they restate the revenue line labelling it 'recurring revenue' and cite it's strong growth; but 'adjusted earnings' also were flat. I don't get the sense that they are being honest about what's really going on with the company. For example, when asked about car insurance monitoring, there was a bunch of hedging and baloney, but clearly no contracts. Maybe they are just getting the industry's scraps, and that's why they can't show meaningful revenue growth.
Further, I think the presentation of 'non-GAAP' earnigs to exclude non-cash and non-recurring items is absurd. Somehow D&A isn't a real expense? Of course it is, and the flip side of that is the comparable amount of real cash that they must invest each quarter in CapEx and 'purchase of intangibles and other assets'. On a cash basis, they are a wash. And litigation expense -- gee, they always seem to have litigation expenses. Maybe the way they run the business, litigation really is a recurring cost?
Finally, the idea of excluding non-cash compensation is disgraceful. Somehow the grant of stock options and SARs isn't a real expense because they are giving shares to management instead of cash? GAAP reporting has it right, and mgt is trying to pull the wool over our eyes. The whole reason FASB instituted Rule #123 was because management lied to their shareholders about the true cost of equity compensation. The actual number: $436,000 in 4Q11 comes to about $0.03 per share. And that's just one quarter. Who are they kidding?
Their GAAP eps of $0.04 in 4Q11 is their real earnings. I think NMRX has been many years of much promised, and little delivered.