Wyatt: Power Adaptor Powerhouse

07/18/2003 12:00 am EST

Focus:

Ian Wyatt

Publisher & Chief Investment Strategist, Wyatt Investment Research

"As a frequent traveler with all of the latest high tech gadgets, I am familiar with the hassle of packing numerous charging devices for my cell phone, PDA, and laptop," says Ian Wyatt, editor of The Growth Report.  "We've found a company that solves this problem with an all-in-one power adapter--Mobility Electronics." Here’s Wyatt’s review.

"Mobility Electronics (MOBE NASDAQ) provides mobile computing products for the notebook computer, PDA, tablet PC, smart phone, and cell phones. The company was a development and acquisition company in 2002, and in the first quarter of 2003 brought its iGo Juice product to market. IGo Juice appears to be filling a niche in the mobile computing market. The product provides travelers with a single power adapter that can be used to recharge a laptop, PDA, or cell phone, and works either from a regular outlet or through an automobile, boat, or airplane power source.

The iGo Juice is currently sold through resellers including CDW, PC Connection, PC Mail, and Radio Shack. Mobility Electronics expects that Juice will be sold by roughly 20 chain stores representing just shy of 5,000 store locations by the end of the second quarter 2003. This compares with roughly 370 store locations selling Juice in the first quarter of the year. Mobility Electronics is also making headway with original equipment manufacturers, or OEMs. The company has already signed on Apple and Winbook as OEMs, in addition to making tremendous progress in signing on resellers.

"Mobility Electronics delivered revenue of roughly $7 million per quarter for 2001 and 2002. It was not until the fourth quarter of 2002 that revenues jumped 40% over the previous quarter to $10.3 million. The company then grew sales by another 16.5% from the fourth quarter 2002 to the first quarter 2003 when the company reported revenues of $12 million. Total revenues for 2002 were $31.3 million, and the company reported a net loss of 78 cents per share. Mobility appears to be turning the corner, reducing quarterly losses from 18 cents in the fourth quarter 2002 to a net loss of $1.1 million of 7 cents a share in the first quarter of 2003. For the full year 2003, Mobility raised its revenue guidance, stating that the company now expects growth of 70% over 2002, a revision from previous guidance of 50% revenue growth. If Mobility were to achieve 70% revenue growth, that would place 2003 revenues at $53.2 million.

"We believe Mobility Electronics is in an outstanding position to continue to deliver stellar revenue growth in the coming quarters with the iGo Juice product. Product revenues are strong, and major distribution channels should be intact by the end of the second quarter. Other product lines represent future growth for this small-cap growth company. We like the product and it appears others do too. The shares are trading at their 52-week high at $5 and change. We believe that this appreciation in stock price is only the beginning. The company is at a turning point, and should break even in the third quarter. Upside potential for 2004 looks amazing, with sales growth likely to continue in the 30-40% range. We are initiating coverage of Mobility Electronics with a Buy rating and a 12-month share price target of $9 based on shares."

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