INITIAL COVERAGE PRICE: $1.76
CURRENT RATING: 6
(Raised from Speculative Buy to Buy on 02-22-04, Raised to a Strong Buy on 05-19-05)
Initial 12-18 Month Price Target $5.00
(Raised Target on 02-22-04 from $5.00 to $5.40, Lowered Price Target on 05-19-05 from $5.40 to $4.50)
Raised Price Target from $4.50 to $5.50 on 02-03-06
The following description of the company is largely adapted from its fiscal 2002 10K, "For over two decades, IRSN has developed proprietary technologies to produce extremely compact packages of solid state micro circuitry, which they believe offer volume, power, weight and operational advantages versus less miniaturized alternatives. These advantages result from their ability to assemble microelectronic chips in a three-dimensional array ("chipstacks") instead of alongside each other on a flat surface, as is the case with more conventional methods. These stacking technologies have also led to the development of collateral technologies for the design of low power and low noise chips, thinning of chips and various specialized applications of chips and stacked chip assemblies in a variety of fields, including wireless infrared transmission, miniaturized sensors, image processing, infrared cameras, digital photography and internet data transmission and switching. The company's core chip-stacking technology was originally conceived and developed as a means of addressing the demands of space-based surveillance. However, the degree of miniaturization potentially realizable from their technologies has attracted research and development sponsorship from various government funding agencies for a wide variety of potential military and space applications, including but not limited to stacked memories, embedded systems, miniaturized cameras and other communications and electro-optical systems. For much of IRSN's operating history, they have derived most of their revenues from such government-funded research and development."
I think the semiconductor business is particularly conducive to innovators, and that is how I view IRSN. As the above description notes, the company has spent a lot of years developing extremely high technology concepts and systems for both military and space applications. My belief is that a lot of the pursuits may have had little commercial application in part because of they were developed to solve problems with high unit values but low unit volumes. However, as commercial technology applications are now beginning to require some of the benefits which IRSN technology has always addressed, more processing capacity at higher speeds in smaller packages among other things, IRSN may finally by standing in front of a considerable commercial opportunity.
my theory is that the company is operating in a very large industry ($140+ billion annually) with next generation technologies that I believe will play a big part in the semiconductor theatre's next phase of growth. I also believe that the company has additional technologies that could also make measurable contributions over the next several quarters and the next few years. I think the prospects of the company's considerable intellectual property portfolio could provide marked upside from the current market capitalization.
DISCLAIMER STATEMENT
The information contained in this report has been written by David Lavigne of EdgeWater Research Partners LLC ("Edgewater") and has been derived from sources considered reliable, but cannot be guaranteed by us. Edgewater and Lavigne are not aware of any material conflict of interest known at the time of the publication of this report. Financial projections and estimates herein represent our independent analysis based upon information in conjunction with the Company's publicly available financial statements. Edgewater and Lavigne may maintain positions in the securities referenced, which may change at any time without notice. Edgewater does not receive fees, warrants or any other compensation from issuers in connection with its research. It does however, encourage issuers and it representatives to subscribe to Edgewater's research, and from time to time, issuers and or their representatives may also purchase individual copies of Edgewater's research products. Edgewater and Lavigne may own options, rights or warrants to purchase any of the securities of the Company. This report is for informational purposes only and is not to be construed as specific investment advice or recommendations, nor as an offer to sell or a solicitation of an offer to buy any securities. The securities referenced are speculative in nature and may not be suitable for your specific investment objective. For specific investment advice or recommendations, please consult with your investment representative.
As of this date, Edgewater Research Partners LLC has received 1 annual "all services" subscriptions ($395) from IRSN employees and/or Directors. In addition, on about 12-20-03, IRSN purchased a license in the amount of $7500 allowing for the unlimited distribution of this report by third parties. The purchase of that license allows for the unrestricted distribution/replication of the report, it should however not be construed as an indorsement by the company of the opinions and conclusions contained in the report. On 02/04/04, IRSN paid a fee of $8500 to attend EdgeWater's "Spring MicroCap Conference for Investment Professionals". For more information regarding the format and use of proceeds of the conference, please visit the "MicroCap Conferences" section of this site. In September 2004, IRSN paid a fee of $10,000 to attend EdgeWater's "Fall 2004 Conference for Investment Professionals".
