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To: Roy F who wrote (191)6/5/1998 9:59:00 PM
From: Roadkill
   of 6936
 
I started accumulating today at 3. I plan to buy more over the next few months to replace the position I dumped when we broke 7.

I'm accumulating based on core communications revenue. Once we get 4Qs away from the AMSC revenue, we'll begin to see steady revenue growth again. I expect that will happen by 4Q 98 or 1Q 99. I don't really expect spectacular growth, but enough to warrant accumulation here. Neither do I expect to make a quick buck. I suspect this will be dead money for a while, but that will give me time to buy more. I've got a three-year+ time frame.

In addition, margins should stabilize by 3Q or 4Q 1998, bringing us back to profitability. KVH has always had fat margins and impressive marketing/distribution for such a small company. Last Q's missed number doesn't really faze me; KVH is in uncharted waters with this transition, and due to the small number of shares outstanding it's easy to miss by a few cents (three to be exact). I think it's clear that KVH missed the number not because its products stink, but because they were paying a bunch of FOG people who weren't yet generating or selling any products yet. That should change by 3Q 98, or 4Q at the latest.

Also, I find the valuation here difficult to deny. I'd be surprised if it went much lower (although I've been wrong many times before!). PE is irrelevant due to substantial expenses associated with FOG acquisition. PSR is a better gauge, and based on non-AMSC revenue it currently stands about 1. For a tech company that manufactures high-margin products with proprietary technology, I'll take that kind of PSR any day.

From a technical/psychological perspective, it appears that we have total capitulation by investors. The break to 2 1/8 a while back and the quick snap-back to about 3 appears to have marked the bottom. Finally, with the expection of yesterday's unexplained spike, volume has been unusually light, even for this lightly-traded stock. Investors appear to have totally lost interest. Heck, this is the first post on SI since mid-Feb. All the things I look for when I bottom-fish :o)

All MHO, of course. I'm interested in hearing some comment/debate on KVHI.

RK

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To: Roadkill who wrote (192)6/5/1998 10:47:00 PM
From: robert b furman
   of 6936
 
Nice to see a bottomfisher tug on the line.Very good recap of situation in your post.I started accumulating this stock at 8 UGH,5 no big deal and 3 3/4 ( I liked it at 8 - I love it at 3 ).

Past holders of this stock are so depressed it is nice to see some fresh attitude . Congrats on your patient good buys.

Agree with margins analysis and future sales expectations.Anyone who hires trains and sends out a sales force of cold call sales generators understands it just doesn't happen because you started doing it.I have ownership in one of the top 50 chevrolet dealership (CSV)in the country - which consists of a field force that contacts potential buyers on a computerized consistent cold call basis and let me tell you it TAKES TIME. Granted we offer mature products not proprietary products.But pounding the pavement for establishing a long term relationship is where it is at - and that takes more time and persistence than can be normally anticipated.

In short I think management is on a correct course for stable growth with dynamic margins. KVHI is in a very niche oriented market - that has future demand and great margins.

It is A long term play and that is OK.My past experience in bottom picking is that 400 -500 percent- averages out very nicely over 2-4 years.Especially when 20 per cent capital gains taxation apply! :-)

Nice to see some value oriented life come into this thread.

Remember: The winner is the one who buys the most at the lowest price!

IMHO

Bob
P.S. Big volume yesterday and spike down into 2's occurred on two blocks of 95000 shares each.Don't know who sold - but Bloomberg referenced a management co. that owned 190,000 shares .Sort of looks like somebody walked up to the Lick Log and said I'm not a long term player - hurt me.(sort makes me feel foolish for not having a GTC lowball Out there to roll in a nice average down position).

No regrets been bottomfishing in other ponds.:-)

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To: robert b furman who wrote (193)6/6/1998 11:54:00 AM
From: Roadkill
   of 6936
 
Nice to hear someone agree that we may be near the bottom. I plan to pick up some more, but want to do it over the course of 4-8 weeks to average in. Makes it less like gambling, more like investing -- at least that's what I tell myself :o)

Thanks for the information about the two 95K blocks. Very interesting. Most intriguing is the fact that the block that sold on Thursday didn't have a substantial impact on the price. 95K worth of buyers? Unlikely at this point, but maybe the MMs are holding some inventory. That can be construed as a good sign.

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To: Roadkill who wrote (194)6/29/1998 7:02:00 PM
From: Roy F
   of 6936
 
REPEAT/KVH to Improve Operating Expenses With Strategic Cost, Staff Reductions
June 29, 1998 05:47 PM


MIDDLETOWN, R.I.--(BUSINESS WIRE)--June 29, 1998--KVH Industries, Inc. KVHI today announced that it has begun implementing a plan that is leveraging information technologies to integrate different divisions and business segments. As a result of the process reengineering, the company is reducing its costs by approximately 20 percent overall through restructuring certain practices and personnel reductions in manufacturing, research and development, sales and marketing and administration.

"The reengineering was a consequence of KVH's commitment to having world-class business practices at every level," said A. Nath Srivastava, COO. "It supports other strategies we have implemented recently, such as the Fiber Optic Group acquisition, to increase product depth and strengthen our international presence."

Efforts are underway to reduce inventory levels, consolidate staff responsibilities, increase focus on high-potential product lines and streamline administrative functions. Production and manufacturing changes resulting from KVH's shift to new markets has enabled the company to reduce staff positions by some 15 percent from 145 employees at its corporate headquarters in Middletown, Rhode Island. The company also is consolidating sales and marketing efforts and streamlining R&D and manufacturing processes. KVH anticipates that these activities will speed product development and manufacturing turnaround times, enhance corporate visibility in the appropriate markets and decrease overhead with the ultimate goal of increasing operating margins.

"We have devised a restructuring plan that will maximize our operational efficiencies over the long term, with an underlying strategy that reflects a shift in the company's focus towards the broadband communications and high-end navigation markets that hold significant promise for the future of KVH," said Martin Kits van Heyningen, president and CEO. "KVH is at a juncture where costs related to new-product introductions and intense technological development have been exerting pressure on our earnings, and we are particularly committed to controlling expenses during this interim period."

New satellite communications products are achieving increased market penetration and KVH expects these revenues will be an important factor in improving earnings, particularly in conjunction with the reengineering effort. Communications revenues will be augmented by TracVision 45, which KVH just began shipping for television viewing by European mariners. In the navigation business, orders for TACNAV systems have been increasing. The company is encouraged by the potential for its fiber optic gyroscopes to broaden its product range in the military market.

KVH expects to release financial results of its 1998 second quarter on July 17. Write-offs related to the restructuring will be reflected in second-quarter results.

KVH Industries utilizes its proprietary fiber optic, autocalibration and sensor technologies to produce navigation and mobile satellite communications systems for commercial, military and marine applications. The company has headquarters in Middletown, RI, (USA) with offices in Illinois, Florida and Denmark.


This press release contains certain forward looking statements that involve risks and uncertainties. The actual results realized by the Company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: competing products and technologies; implementation of mobile satellite communications technology; market potential and penetration; reliability of outside vendors, service providers and products; regulatory issues; maintaining appropriate inventory levels; disparities between forecast and realized sales; and design delays and defects. Additional factors are discussed in the company's Annual Report on Form 10K filed with the Securities and Exchange Commission on March 25, 1998. Copies are available from the company's Corporate Communications Department.






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To: Roy F who wrote (195)6/30/1998 2:29:00 AM
From: Roadkill
   of 6936
 
Hmmm . . . Let's see if I've got this right:

>>"Efforts are underway to reduce inventory levels, consolidate staff
responsibilities, increase focus on high-potential product lines and
streamline administrative functions."<<

Read: We're having a fire sale to get rid of these bloated inventories, and had to fire a bunch of people who had nothing to do.

>>"KVH anticipates that these activities will speed product development and manufacturing turnaround times, enhance corporate visibility in the appropriate markets and decrease overhead with the ultimate goal of increasing operating margins."<<

Read: This FOG acquisition has been a little harder to swallow than we thought. Operating margins stink.

>>"We have devised a restructuring plan that will maximize our operational efficiencies over the long term, with an underlying strategy that reflects a shift in the company's focus towards the broadband communications and high-end navigation markets that hold significant promise for the future of KVH"<<

We can't sell the stuff we used to sell, so we're gonna try to sell some new stuff. Stuff we haven't gotten around to inventing yet, but which is gonna be real neat. And fast. "Bandwidth" . . . "high-end" . . . "significant promise" . . . yada yada yada

>> "KVH is at a juncture where costs related to new-product introductions and intense technological development have been exerting pressure on our earnings, and we are particularly committed to controlling expenses during this interim period."<<

Earnings stink, even more than anyone expected.

>> "The company is encouraged by the potential for its fiber optic
gyroscopes to broaden its product range in the military market."<<

"Encouraged"? By "the potential"? Yikes.

>>"KVH expects to release financial results of its 1998 second quarter on July 17. Write-offs related to the restructuring will be reflected in second-quarter results."<<

In case we didn't get it the first few times: Earnings are really going to stink.

Still long but skeptical. Good news: my basis is 3, so I only can lose 3 points!

RK

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To: Roadkill who wrote (196)6/30/1998 9:08:00 PM
From: Step1
   of 6936
 
Glad I have just been watching...

I guess patience will be rewarded this time more than any other time...

Seems like the numbers will really be dismal
sg

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To: Step1 who wrote (197)7/10/1998 11:22:00 AM
From: Roy F
   of 6936
 
KVH Receives $1.7M in Orders, Awards ForTACNAV Systems and New Development
July 10, 1998 11:07 AM


MIDDLETOWN, R.I.--(BUSINESS WIRE)--July 10, 1998--The U.S. Army has ordered about $772,000 in additional TACNAV(tm) systems from KVH Industries, Inc. KVHI , bringing total purchases under an existing contract to nearly $11 million. This latest option exercise represents the first use of the KVH tactical navigation system by the U.S. Army National Guard, a move that is notable because it extends TACNAV employment beyond initial Army application parameters for the first time. The company expects to begin shipping in the 1998 third quarter.

"We are gratified by the continuing demand for our TACNAV systems in such a large market as the U.S. military," said Martin Kits van Heyningen, president and CEO. "The combination of our system's success in the field and its reasonable cost is eliciting a growing consensus within the Army and among congressional representatives that TACNAV offers a navigation solution for a broad range of military needs. We believe the result of this positive response may be a ten-fold increase in TACNAV sales to the U.S. military."

With the aid of $916,000 in Small Business Innovation Research (SBIR) grants that have been awarded to KVH, the company also is developing fiber-optic components with demonstrated capabilities for enhancing TACNAV performance. A next-generation fiber-optic upgrade to TACNAV, ToFOG(tm) Navigator, is advancing through development under a Phase II SBIR grant for $747,000, including options. ToFOG Navigator will offer the benefit of a quantum leap in pointing and targeting accuracy from the basic TACNAV system. In addition, ToFOG Navigator will solve the problem of Global Positioning System (GPS) jamming, which the military has identified as an existing and growing problem with potentially serious consequences for U.S. forces.

A $70,000 Phase I grant from the Navy has just been awarded to KVH to develop a Global Positioning fiber optic gyroscope sensor system that consistently delivers reliable, highly accurate navigation and targeting capabilities in mobile environments. The company's three-axis, non-magnetic system is an integration of GPS, FOGs and accelerometer sensors. The KVH system will increase bandwidth, improve accuracy and ensure the continuous delivery of attitude and azimuth functions even when GPS is blocked, all at a fraction of the cost of traditional inertial systems. Potential applications include military land targeting, training systems, fire direction, merchant vessel navigation, aviation flight control, positive train control and precision agriculture.

The benefits of using fiber optic gyroscopes in military applications were described by Mark Hewish in the April 1998 issue of Jane's International Defense Review:


The all-solid-state nature of fiber-optic gyros (FOGs) gives them
several advantages over their mechanical counterparts or ring
laser gyros in military applications. These include low cost,
long shelf life, rapid start-up, small size, low weight, rugged
construction and an inherent immunity to electromagnetic
interference.

FOGs also have the potential to provide highly precise, sustainable satellite pointing, and KVH has been awarded a Phase I grant of nearly $100,000 from the Army to develop antennas for high-bandwidth communications on the move. The company is combining its FOG and TracVision(R) II control system to enable sub-0.5 degree pointing for the next generation of X-, K- or Ka-band communications systems for ultra-high data rate transmission.

There are potential applications for a KVH high-accuracy communications system in both the military and commercial sectors. The Global Broadcast System (GBS) used by the military for worldwide, high data rate digital communications requires precision antennas with minimal drift so that vehicles or vessels on the move can maintain satellite contact. As demands increase for mobile high data rate capabilities in business and leisure venues, there are corresponding opportunities for KVH precision antennas in mobile applications.

"SBIR grants are assisting KVH in developing fiber-optic products for a range of military, OEM and commercial applications," said Kits van Heyningen. "We believe this technology will significantly enhance products in both our navigation and communications sectors where demand is escalating for some advanced features that can best be provided through fiber optics."

KVH Industries utilizes its proprietary fiber optic, autocalibration and sensor technologies to produce navigation and mobile satellite communications systems for commercial, military and marine applications. The company has headquarters in Middletown, RI, (USA) with offices in Illinois, Florida and Denmark.

This press release contains certain forward looking statements that involve risks and uncertainties. The actual results realized by the Company could differ materially from the statements made herein. Factors that might cause such differences include, but are not limited to: competing products and technologies; implementation of mobile satellite communications technology; market potential and penetration; reliability of outside vendors, service providers and products; regulatory issues; maintaining appropriate inventory levels; disparities between forecast and realized sales; and design delays and defects. Additional factors are discussed in the company's Annual Report on Form 10K filed with the Securities and Exchange Commission on March 25, 1998. Copies are available from the company's Corporate Communications Department.

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To: Roy F who wrote (198)7/10/1998 11:13:00 PM
From: Roadkill
   of 6936
 
What are your thoughts on this press release, Roy?

When I first read it this morning, I dismissed it as (1) a rather weak way to support the stock, (2) a way to prepare us for crappy earnings, or (3) both.

Re-reading it this evening -- a little more carefully, I admit -- I saw for the first time the following:

"We believe the result of this positive response may be a ten-fold
increase in TACNAV sales to the U.S. military."

This is a serious statement. The use of "ten-fold", even under the SEC "Safe Harbor" guidelines, indicates dramatic possibilities. The $11 million sold to date has been spread over three years or so. Even spreading the possible $100 million over three years, with existing customer revenues this would create serious top-line growth. Considering that we currently trade at a trailing PSR of about 1, and considering that we would go to a PSR of at least 2 or 3 with any sort of consistent, growing revenue base, this statement implies serious growth in the stock price. It is notable that MKVH didn't say "double" or even "triple", but "ten-fold".

Does anyone out there have any insight into the FOG technology? Does it really add enough to KVH's existing products to stimulate this kind of demand? I'd be interested to hear some thoughts on this.

RK

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To: Roadkill who wrote (199)7/11/1998 12:04:00 PM
From: Roy F
   of 6936
 
RK: Thanks for making me look at the release more closely.

"We believe the result of this positive response may be a ten-fold
increase in TACNAV sales to the U.S. military."

Strong words indeed. KVH has suggested that the company's market would return to more historic growth rates later this year (second half), I believe. 10X seems a bit much, but if the TACNAV becomes the standard for the Coast Guard, could the Navy be far behind?

Even if they only get half of the 10X, there's money to be made.

JMHO,

Roy

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To: Roy F who wrote (195)7/12/1998 8:43:00 PM
From: Roy F
   of 6936
 
RK and thread: Excerpt from PR of 6/29...

KVH expects to release financial results of its 1998 second quarter on July 17. Write-offs related to the restructuring will be reflected in second-quarter results.

I did, however, receive a snail mail from KVH on Saturday that indicates the earnings release will be 7/21.

Seems like a helluva opportunity to get in at the bottom. I'm awaiting a response from the company regarding the press release and the potential 10X growth in TACNAV. Will post when and if I hear...

Any thoughts on an entry point? Before the release, if the TACNAV estimate is repeated in the announcement... or, should one wait till after the earnings and try to catch a dip?

Roy

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