R&D investments To elaborate on my prior comments regarding R&D investments - let's look at the Q2, 2008 revenue and margins and the prior years worth of R&D investments.
2006 R&D Total = $4.7 million
2007 R&D total = $5.2 million
2008 R&D total = $8.1 million
2009 R&D total = $8.9 million
2010 R&D total = $10.3 million
2011 R&D total = $11.5 million
2012 R&D total (est) = $12.8 million
Q2, 2008 revenue / GM was $23 and 52%. Prior TWO year investment in R&D was $9.9 million
Jump forward to 2012. Looking at the past TWO years of R&D ($21.5) million, HEM managed to DECREASE their revenue, and DECREASE their GM down to 43% all while more than doubling their R&D 'investment'.
Makes you wonder exactly how they are determinig where to spend their R&D dollars. The analyst today on the call had a great question regarding GM. It doesn't seem that the company has an active program or plan in place to improve GM on existing products. What exactly is all the R&D going towards then??
Not a great way to run a hardware company - but, oh wait, SK decided what Hemisphere GPS shouldn't really be a hardware company anymore. Now it's going to shift it's focus towards software! Hmmm...
I think there is value in this company - but only as a combined entity with another player to grow their market share and scale. Obviously management saw this but for whatever reason killed the deal that was discussed Q2, 2011 (and cost them $800k). I bet looking back now that deal should have been done, eh? I bet it wasn't done since it didn't enrich management enough.