One of the fun things about serving as your friendly neighborhood Stock Gumshoe is that boredom is never a challenge — each morning I get up and check the email box, and there’s invariably some bit of balderdash in there just waiting for a look-see.
And today? No different, as you’ve no doubt surmised. Today I’m looking at an ad from Karim Rahemtulla for his Xcelerated Profits Report, about whose teasers I’ve written many times before.
And though the company teased here is essentially focused on touch screen technology and some related businesses, the part that grabs your attention is the bit about a mysterious meeting that will take place, according to the ad …
“On September 15th…
“This Discreet Amsterdam ‘Rendezvous’ Will Ignite a $678 Billion Tech Explosion ….
“‘The event of the decade.’ – BBC News Technology Forecaster
“Here’s how you could pocket nine-times your money ahead of the coming boom…
“It happens on September 15…
“That’s when top executives from around the world will discreetly meet at a private location in the heart of Amsterdam…
“The heads of companies like Motorola, Google, Intel, and Qualcomm will begin their meeting promptly at 8:00am…
“There will be no media coverage… you won’t see it on live broadcast… and full details won’t be published in the Journal for months.”
This is a technique I’ve seen used a few times — copywriters love to find a little meeting, or congressional hearing, or technical conference somewhere, and use that scheduled event to create an aura of secrecy and mystery and, of course, urgency … so don’t worry, I’ll tell you about this special meeting and about the company being teased, just give me a few more moments of your time.
So what’s going to happen at this meeting? Well, the Rahemtulla version is:
“In short, they will fast-track the proliferation of a new breakthrough that Popular Mechanics calls a ‘highly evolved…technology… changing the way humans interact with machines.’
“It’s a ‘touch’ technology that will soon let you feel the texture of an iceberg thousands of miles away… test the firmness of a mattress over the internet… and even touch your spouse’s hand while you’re away on business.
“It might sound far-fetched, but this technology already has a handful of tech giants scrambling to get a piece of the action.
“In fact, Nokia – the global cell phone leader – just got on board, and is eager to make this next generation ‘touch’ technology a major component in its 2010 lineup.”
How can you not want to buy that? How about some details that can tell us specifically which company this is? The teaser letter goes on to say that just the top four industries who might use this technology would make it a $678 billion market. We throw around a lot of numbers in this space, but that’s a big one — that’s about twice as much money as ExxonMobil had in sales over the last year.
They then go on to explain the technology, without using the key word that most accurately describes it (that would make it too easy, naturally) …
“It’s called human-computer interaction technology, or HCIT for short.
“If you never heard of HCIT before, you’re not alone.
“According to the CEO of tech company Novint, ‘Not that many people know about it, but it’s one of the few technologies’ that ‘fundamentally changes’ the world of electronics.
“It uses tiny chips installed under the surface of electronic devices. When activated, the chips deliver a “touch” response that you can actually feel”
And they go on to insert their favorite made-up acronym, HCIT, into several quotes to make it seem that much more special …
“‘One word that should be in everybody’s vocabulary is [HCIT].’
– BBC News Technology Forecaster
“‘[HCIT] is the new math for touchscreen devices.’
– Popular Mechanics
“‘Long neglected in favor of the sensory heavyweights of vision and hearing, the study of touch lately has been gaining new cachet.’
– The New York Times
“‘The future of the computer interface will… revolve around touch.’
– Technology Review
“‘A transformational new generation of [HCIT] is about to emerge.’
“‘At the moment we look at our machines and they look at us, but they don’t have the sense of physical touch or feedback. So [HCIT] is the way to give sensory touch between machines and humans.’
– BBC News Technology Forecaster”
So … what the heck are they talking about? Well, when they say “HCIT” we can just insert the word “haptics” — haptic technology is the generally used term that’s used for the “forced feedback” to the user that makes a computer interaction seem more real, simple versions might be the vibration in a game controller when the race car you’re driving hits a bumpy patch, but the reference they use inthis is for improving touch screens — so if you used a touchscreen keyboard on a phone, for example, you would feel some feedback from the screen that gives a sensation of pressing actual keys unlike, say, the current iPhone touchscreen.
Or in another use that’s often mentioned, the da Vinci robot from Intuitive Surgical might be signfiicantly improved if haptic technology was added so that when a surgeon moved the instruments inside your body, he could feel the resistance of the material he was cutting, or nudging against, or what have you, to make it better replicate “real life” and make it less of a purely visual exercise.
So the plain explanation of HTIC/haptics is that it can provide you with a touchscreen that touches back.
But what is this company, and what’s the September 15 event?
Well, the event on September 15 in Amsterdam is OSiM World — OSiM stands for Open Source in Mobile, and it’s a trade meeting of companies involved in creating, improving, or using open source technology and software in mobile devices. And yes, the emerging open source developments — which include stuff like Google’s Android operating system for phones, as well as many versions of Linux and other stuff that I don’t even half understand — is of significant importance for the big players in the field, so lots of household names like Qualcomm, Nokia, Intel and ARM will be there as major sponsors.
But the company being teased here? Let’s look into that a bit more — the money-making argument, at least for the huge returns teased, the implication that you could make nine times your money in a matter of months, revolves around the next breakthrough in smart phones that use this HTIC/haptics stuff … and if we’re talking about a potential huge smartphone player that hasn’t yet gotten credit for that potential, we must be talking about Nokia … and the market buzz they’re trying to take currently belongs, of course, to Apple’s iPhone.
“Without HCIT, one MarketWatch industry insider says the iPhone ‘keyboard is a disaster.’
“And Apple’s big mistake is opening the door for Nokia.
“You see, as Bernstein Research analysts report: ‘Apple is missing out on 83 percent of the handset market today…’ and this ‘could prove very lucrative for Nokia.’
“And Nokia isn’t wasting any time…
“‘This is the first technology I’ve seen… which could genuinely revolutionize the use of handheld devices… [HCIT] is something which every phone, PDA and handheld computer manufacturer would give their right arm for…’
– Sunday Times’ technology columnist
“Nokia’s Covert Power Play
“What most people don’t realize is that Nokia is the largest cell phone provider in the world.
“Over 1.1 billion people worldwide use Nokia phones.
“That’s a 40% global market share.
“So if Nokia released a phone with advanced HCIT, it could blast the iPhone out of the water…
“And that’s exactly what’s about to happen – and why I wanted to get this information in your hands today.
“As Nokia’s CEO says, HCIT ‘will drive the next wave of industry growth.'”
So the argument is that Nokia will be the sugar daddy, and the company being teased will be the recipient of that largesse as they allow Nokia to use their technology to take over the world of smart phones with better touch screen technology.
And this little technology company? After all this verbiage, that’s what we finally come down to, as we have so often in the past, a little firm that doesn’t show a profit but has filing cabinets packed with patents …
In Rahemtulla’s words,
“I’ve isolated the one company that owns over 700 HCIT patents… the same patents now borrowed by Nokia, Samsung, and BMW…”
So that’s the final clue that I need to tell you that indeed, this little company is …
And yes, they’re quite small — and on the surface, they look dirt cheap. The market cap is just about $120 million, and they have $80 million in cash as of the last quarter. Then again, they lost more than $50 million in the last year, so that cash might not last them all that long unless they’ve got some business coming in right quick.
They do claim to have over 700 patents, and BMW, Nokia and Samsung have all licensed their technology to one degree or another. Will OSiM World bring some kind of new breakthrough for them? I have no idea — it wouldn’t be surprising if they were in some way involved in the conference, but from what I can tell from a quick look at the OSiM website they’re neither presenting, exhibiting, nor sponsoring anything at the event. OSiM is much more focused on the economics and practicalities of becoming a successful open source developer and working with the manufacturers than it is on the specific design of handsets or touchscreens — I didn’t see anything on the agenda about touchscreen technology, but, of course, it’s possible that there’s a different top-secret meeting in Amsterdam that day involving mobile phone companies, or that I didn’t look closely enough. Immersion is a member of LiMo, the open source foundation that is trying to build a new and independent open source mobile phone operating system.
And there’s a bit more to understand about Immersion — they did report losing about $50 million last year, but they also just recently announced that they have to re-analyze their 2008 numbers because they might not be accurate, so that might change. They also got a delisting threat from Nasdaq because they haven’t yet filed a timely second quarter report for this year, perhaps because of these same accounting challenges (I don’t know, that’s just a guess).
And Immersion’s haptics technology isn’t just a patent — they do have devices selling right now that do use their technology, including phones from LG and Samsung, as well as some other applications including high end automotive controls, video game controllers, medical training, and industrial touchscreen controls. Since analysts still expect IMMR to lose about 50 cents a share next year, my guess is that if we’re looking at a massive return in the next six months it will be from a much-faster-than-expected series of Big Deals being signed for licensing IMMR’s haptics into smartphones. That’s a total guess.
Frankly, for the shares to really capture investors’ attention to that degree, bringing near-1000% returns, they might have to put Immersion’s technology in the next iPhone — Nokia certainly has a great smart phone, but there aren’t quite as many bloggers out there speculating on the next Nokia technology, or millions of investors trading over rumors of their next product … if you want super sexy, and you want investor attention, it’s still Apple all the way.
If you’d like to read up a bit more on haptics, the Popular Mechanics article that’s quoted in the ad is a decent place to start, it’s from last year but is pretty interesting. Nokia is indeed working on new phones with Immersion, though in the past they’ve also funded their own research into haptics, and I’m sure other companies are working on feedback and new touchscreen technology all the time, too — I don’t have any idea whether or not IMMR will be the one little guy that comes out of this a huge winner or not.
So what do you think? Will Immersion be the next big winner? Will we see their haptics licensed for great new surgical tools, or for the next must-have phone or laptop? Will their accounting problems be a big deal, or just some t’s they forgot to cross? Beats the heck out of me … I can just tell you that I’m pretty sure this is the stock that Rahemtulla is teasing, if you’ve got an opinion feel free to share it with a comment below. And if you’ve ever subscribed to the Xcelerated Profits Report, by all means, click here to review it for your fellow investors and let us know if it’s worth the cabbage.