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Technology Stocks : KVH Industries, Inc.
KVHI 12.550.0%10:37 AM EDTNews

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To: Sector Investor who wrote (415)4/23/2000 3:25:00 PM
From: robert b furman  Read Replies (2) of 6932
 
Hi Sector,I have just completed a visit to the Middletown Facility @ KVHI. In the interest of full disclosure I am a long term stock holder(First bot KVHI on 7/30/97 @ 8 3/8 ouch).I currently own 26600 shares @ an average cost of 4.3421721.It must be stated I have a bullish bias regarding this company and their sector and related products.The below observations are in NO WAY intended to be unofficial quotes of any KVHI employees. They are simply my personal interpretations.No one should buy any stock without doing their own Due Diligence.I surely have an investment style that few should copy or approve of.I am a positional player of high tech companies who I BELIEVE in.This strong hold temperament has enabled capital gains tax treatment of past gains.I believe in owning stocks for long runs - buying them at emotional selling sprees and holding an undue concentrated portfolio. That being said below are my observations:

Concern # 1 that I wanted to understand was: Did the purchase of Fiber Optic Gyro technology from Andrews Corporation represent a proper expenditure of KVHI assets.

As I spoke to the engineers of each of KVHI's Core products: Military Navigation, Satellite Communications, and Fiber Optics - ALL referred to the implementation of fog technology as an upgrade to the capabilities of their products.For military vehicles it enabled quicker recovery - a nice feature when the enemy is firing back.For satellite communication it enables quicker tracking in the phone/tv applications.In the military it replaces mechanical gyros (very expensive with moving parts) FOG although expensive for nonmilitary applications is MUCH less in cost and superior in durability and superior in capabilities(fast).

For the Fiber optics Division - The recently announced purchase of FOG sensors on the Aegis class Naval ships is initial confirmation of the sensor's superior capabilities.The extension of these sensors in other applications on other ship is a no brainer.Can you imagine how sought after these will be if they are more accurate/quicker ,cost less, and have no moving parts and the very expensive costs associated with maintainence - oh yes AT A MUCH LOWER PRICE !!

Huge in the future of the FOG Segment is the nice plus that they can be used in determining current flow.They also are primarily (at least initially engineered for motion determination).Two sensors can cover both x and y axis rotation ie tank turret / robot arm / satellite dish's stabilized platform etc.

The real key is developing the etc.One thing for sure if someone out there makes mechanical gyro's it is a great short.


Concern # 2 was: Can internet capabilities be developed SOON for mobile applications.This is much more complex,as it requires resources outside their control, i.e. satellites LEO or Geosynchronous and how will tomorrow's satellites transmit i.e. shape /size of dish.This will be further out and requires an evolution of the entire communications industry.The key plus here to report is they are well ahead of the curve.When the birds go in place they will have the dish waiting.

Concern # 3 Will military come back to be what it once was?I quite frankly had this wrong(being somewhat negative)I found their optimism much stronger than I'd anticipated.Heck they oughtta know!!! Both Tac Nav and Satellite platform upgrades can/will be done in greater volume to the future primarily as the result of FOG.

Concern # 4 With R&D being high and losses continuing does the cash burn bode trouble in the future? This quite frankly was a huge concern of mine.I report a much more confident opinion now compared to before.I'm no guru, but that is just my gut feel.Afterall with volatile markets like we experience - a GUT FEEL is quite frequently needed.( gulp )


As side notes during the visit all employees were exciting friendly and extremely intelligent as they tried to make our conversation simple.Alice Andrews is a true company asset and an unbelievable host.

Last but not least a final conversation with CFO Richard Forsyth.Mr Forsyth exchanged some historical achievements regarding acquisitions/negotiations on major purchases like the FOG purchase and the facility purchase and lines of credit negotiations.Not to use any quotes but suffice it to say
"These folks treat assets like they're hard toget"JMHO My words .
"They don't waste cash they fight to not spend it" JMHO my words.
"I like that very much" JMHO my words.

In summary I'm looking to accumulate more stock of KVHI.To be successful they will have to execute in the market.I didn't understand a Fiber Optic Gyro and what it can do.After seeing it and understanding the concept only - it is brilliant.It is as exciting as tuned lasers and DWDM but the key will be to identify markets and serve them.It's alway toughest in the beginning when awareness of your product isn't universal.Somewhere out there is a very rich man who invented the wall switch.

I'm betting that FOG technology will reward KVHI handsomely in the future. It's exciting and very dynamic.The homework been done and the FOG delivers.Now let's sell a bunch of them - (at high margins of course) HEHEHE.

P.S I just have to have a Trac Vision LM installed on my wife's Tahoe. It'll look funny but I'll have CNBC playing in the back seat as I commute to and from work.It still is too big to fit on my Harley HEHEHE.


YYEEHHAAWW !!!! YYIIPPPPEEEE !!!

This stock is a long term tiger by the tail!!! JMHO

Hope this helps.


Bob


P.S. I hope somebody out there panic's and sells KVHI cheap next week. I'll be there with a dump truck loading up and with a little luck I'll average down.


Note I didn't mention Trac Phone because they're still the only game in town.Very competitive and in case anyone wants to know they offered to give me an Iridium phone - they had a stack of them.<VBG I thought the rebate was a stroke of genius and as a dealer I really like the application>.
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