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Notes on Gentner Communications 2Q 99 Conference Call
By Jon DeBry,
Last Update: 4:00 PM MT Jan 14, 1999
SALT LAKE CITY, Utah - Gentner’s conference call revealed the
release date of the APV, a possible new institutional investor, a steal from a competitor,
and access to mo’ money, among other things. It is definitely worth a listen when
they post it to their web site in the next day or two.
The video-conferencing product (named the Audio Perfect Video, or APV
200) will be released in early February. It is designed to be teamed with the AP 400.
Gentner has already received orders for the APV 200. It is a noteworthy technical
accomplishment to go from press release to product in three months. It will be priced
between $1,200 and $15,000 (someone should have asked them to narrow the price range!).
An analyst from Wasatch Advisors, a local money management and mutual
fund company, asked several questions. This is the first time that someone from Wasatch
has asked a question. As of September 30, 1998, Wasatch didn’t own a share of Gentner
stock. It wouldn’t be too surprising if part of the recent run-up was due to Wasatch
taking a position, although doing a correlation analysis between Gentner's stock price and
the performance of the Wasatch Micro-cap funds reveals that Gentner is definitely not a
large position in these funds.
Wasatch runs several micro-cap and small-cap funds. When they find a
stock they like, they tend to stick it in most of their funds, and they tend to hold it
for a fairly long time. Assets of the funds are: Micro-cap fund - $118M, Micro-cap value -
$14 M, Mid-cap - $38 M, Growth - $153 M, Aggressive Equity - $124 M. As you can see, their
funds are small enough that Gentner could make quite an impact. If the Wasatch analyst is
any good, he can’t ignore Gentner! The fundamentals are too good! Whoops, got
excited, sorry.
The National Weather Service contract is for 400 installations over 5
years - a great stream of revenue. Also, Gentner hired away the national sales manager of
one of their competitors as their new East Coast sales manager.
Gentner is and has been expanding their sales force (Fran is a
"sales" type of person, and this is part of moulding the company to her
strengths), and is also investing in R & D. In response to a caller’s question,
Fran said that there are current projects in R&D that may address "holes" in
Gentner’s product line.
Fran stated, and I’m paraphrasing it here because I don’t
remember the exact words, that she had a ‘High degree of confidence in the revenue
stream used in estimates". On the other hand, she warned that
"fluctuations" are a natural part of their business. I like the first quote
better.
Besides their $2.5 million pile of cash, they changed banks and
increased their credit line to a $5 million line plus a $2.5 million lease line. They had
a total line of $2.2 million before. Their order backlog is roughly the same as it was
last quarter. And finally, Gentner only needs to attain a $5 share price to apply for a
NASDAQ national market listing.
All good stuff. I think you can feel good about the new earnings
estimate, and that any potential surprise would be on the upside <JD>. |
