Friday, December 13, 2013

Surveying the Latest News from Small Cap Security and Surveillance Stocks (OSIS, VIMC, ALOG, LOCK & VSYM)

Small cap security and surveillance stocks OSI Systems, Inc (NASDAQ: OSIS), Vimicro International Corporation (NASDAQ: VIMC), Analogic Corporation (NASDAQ: ALOG), Lifelock Inc (NYSE: LOCK) and View Systems Inc (OTCBB: VSYM) have been producing a steady flow of news lately that investors might want to take a closer look at. After all, the whole security and surveillance industry is pretty vast as it would include everything from airport scanners to security cameras to software securing everyone's personal or online data. With that in mind, here is a look at the latest news from important small cap security and surveillance stocks:

OSI Systems Looses a Key TSA Contract Over Chinese Made Parts. On Thursday December 5th, small cap OSI Systems, a vertically integrated designer and manufacturer of specialized electronic systems and components, announced that its security division, Rapiscan Systems, was notified by the TSA that a delivery order placed with Rapiscan on September 26, 2013 for Advanced Technology X-Ray (AT-2) based systems was being terminated for default. OSI Systems has since de-booked this order valued at approximately $60 million. According to subsequent media reports, the baggage-screening equipment contained an unapproved part or parts manufactured in China and the TSA is seeking to ban Rapiscan Systems from future TSA contracts. One has to wonder just how that managed to happen – whether it was a screw-up at OSI Systems' end, the TSA's end or at both ends. Its also triggered a number of shareholder lawsuits because OSI Systems' security division, which includes the TSA work, generated 46% of the company's revenue in the last fiscal year. OSI Systems is down 20.9% since the start of the year but up 291.7% over the past five years.

Vimicro International Corporation Announces a Big Order. Earlier this week, small cap Vimicro International Corporation, a leading Chinese video processing IC and surveillance solution provider, announced that its subsidiary Shanxi Zhongtianxin Science and Technology Co., Ltd. had received an order for a SVAC (Surveillance Video and Audio Coding)-based technology solution worth nearly $41 million where Vimicro will receive approximately $16 million. Basically, the Baoding Public Security Bureau will install a city-wide SVAC-based surveillance network project in Baoding city in Hebei province. The network will monitor for security, surveillance and traffic monitoring and consist of several thousand video surveillance stations with deployment beginning in the fourth quarter of 2013. The deal is worth noting because Vimicro International Corporation has reported revenues of $14.865M (3 months ending 2013-09-30), $17.315M (3 months ending 2013-06-30) and $15.888M (3 months ending 2013-03-31) for the first three quarters of this year plus net income of $2.170M (3 months ending 2013-09-30), $2.731M (3 months ending 2013-06-30) and $2.206M (3 months ending 2013-03-31). Vimicro International Corporation is up 49.2% since the start of the year and down 5.2% over the past five years.

Analogic Corporation Presents at an Investment Conference and Reports Earnings. Mike Levitz, senior vice president and CFO of small cap Analogic Corporation, a healthcare and security technology solutions provider, presented at the Imperial Capital Security Investor Conference yesterday at 2:15 pm ET. Investors can listen to the webcast here on Analogic Corporation's investor relations website. In addition and last Monday, Analogic Corporation reported that first quarter revenue fell 8% to $110.1 million as strong double-digit growth in direct Ultrasound and Security was offset by timing in Medical Imaging and planned lower OEM Ultrasound probe sales. The company's GAAP net loss for the first quarter was $3.8 million, or ($0.30) per diluted share, verses net income of $4.4 million, or $0.35 per diluted share. Analogic Corporation is up 15% since the start of the year and up 175% over the past five years.

Lifelock Inc. Yesterday, small cap Lifelock Inc, a leading provider of identity theft protection services for consumers and identity risk and credit worthiness assessment services for enterprises, announced the acquisition of mobile wallet innovator Lemon for approximately $42.6 million in cash plus LifeLock has agreed to issue equity customary for a transaction of this size that will vest over the next three years. Apparently, the Lemon Wallet app which allows consumers to replicate and store a complete digital copy of their personal wallet contents in one location for records backup as well as mobile use of items including credit cards, identification, ATM, insurance and loyalty cards, has been downloaded more than 3.2 million times. Its should also be mentioned that CNBC's Jime Cramer recently described Lifelock Inc as having a broken IPO but not being a broken company as its now up 97.2% since the start of the year and up 119% since October 2012. 

View Systems Inc. A manufacturer and installer of weapons detection identification systems, video management platforms and tele-data communication networks, View Systems' security products are used by correctional facilities, schools, courthouses, government agencies, event and sports venues and commercial businesses. View Systems' most important security products Include: The ViewScan, a walkthrough concealed weapons detector (CWD) that uses advanced magnetics technology to visually locate threat objects like hidden razor blades and cellular phones, but not common objects such as coins, keys and belt buckles so that false alarms that slow down security checkpoints can be eliminated. The Visual First Responder, a first response remote video transmission system that can be utilized in areas where hazardous materials have been exposed plus its small enough to be worn on a belt, helmet or vest (or even by K-9 teams) while it transmits conventional video or infrared imagery to a command post. Its considered ideal for law enforcement SWAT teams, Fire Rescue units and HAZMAT team operations.

Last Summer, View Systems had issued a press release saying they are rapidly regaining traction in foreign markets for security systems and that the company has a partnership with Brazil based Armorin, LLC to penetrate the Brazilian market (along with the rest of South America) as imported electronic security equipment there was worth an estimated $1.5 billion as of 2011 while the value of locally manufactured equipment was estimated to be worth $1.5 billion. Moreover, over a dozen installations made in Bangladesh late last year have apparently been very well received by the government and local security organizations to the point where the company is looking for someone to distribute its products in the South Asia and Middle East regions. View Systems has also recently signed an agreement with a distributor in West Africa. Finally, View Systems has recently received new orders for its ViewScan from the State of Maryland, the Detroit School System Department of Corrections of Connecticut, Milwaukee and the Dodge City Kansas Community College.

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