Nanotech: A View from Japan

04/14/2006 12:00 am EST

Focus:

Josh Wolfe

Editor, Forbes/Wolfe Emerging Tech Report

Josh Wolfe, the advisory world's leading authority on nanotech recently attended Japan's Nano Tech 2005. Here are some of his observations from the conference, and the outlook for the latest stock added to his "Nansophere" in his Forbes/Wolfe Nanotech Report.

"Nano Tech 2005 was the world's largest nanotech gathering held in Tokyo's Big Sight conference tower over three days. Over 30,000 people attended this conference in an effort to learn about new nanotech research and development and catch a glimpse of the latest nano-enabled prototypes from Asia's consumer electronics and chemicals giants. Two general trends in nanoscale electronics development emerged from the more detailed scientific presentations.

"The first is the belief that future achievements will focus on the hybridization of dissimilar technologies, such as the integration of solar cells and fuel cells in portable electronic devices. The second focused on how interdisciplinary advancements in the fields of bio and nanotechnology will drive future product innovations. In other words, nano-electronics, nano-biotech and nano-energy were 'front' burner sectors where the advancements would be realized soon.

"On one level, these types of conferences are mostly about hype and rallying up investors, potential alliance partners, clients and journalists about the prospects for an industry or sector. However I must say that I was taken aback by Japanese commercial enthusiasm for the prospects of nanotechnology. Asians don't seem to be as hung up as Americans are with stock hype, IPO's or Street buzz. There was no question of nanotech's validity at this conference.

"These giant companies are squarely focused on leading the globe in new technologies and processes that take advantage of our ability to manipulate matter at the molecular level. The conference highlighted Japan's exhaustive, bottom-up approach to research, with an emphasis on ongoing collaborations between industry, academia, and government. As I have said in previous issues, the Asian's have fully grasped the power and potential of nanotechnology and are determined to lead the world in its industrialization.

"Meanwhile, the newest member of our Nanosphere portfolio, Invitrogen (IVGN NASDAQ), is involved in nanoscale labeling and detection. The firm reported an excellent Q4 2005 with earnings rising 63% over the prior year quarter, bolstered by improved demand and the impact of well-executed acquisitions. Invitrogen earned $49.6 million ($0.87 per share) versus $30.5 million ($0.55 per share) in Q4 2004. Fourth quarter pro forma EPS was $0.90, versus Wall Street's consensus of $0.88. The company's fourth quarter revenues surged from $262.2 million last year to $325.3 million in the latest quarter (analysts had projected $317 million in revenues).

"The company Chief Executive Greg Lucier said he expects to spend another $500 million this year for accretive acquisitions. This comes on the heels of Invitrogen's thrifty purchases of nanotechnology firm Quantum Dot and several other life sciences firms in 2005.Invitrogen now expects 2006 pro forma earnings of $3.90-$4.10 per share on revenues of $1.33-$1.36 billion. The Street believes IVGN results will be at the high end of the ranges, projecting EPS of $3.98 on revenues of $1.35 billion. Invitrogen currently trades at 18.5 times the low end of its own 2006 EPS estimate. We reiterate our Buy rating."

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