Uni-Pixel Inc.: Boom Or Bust Based On Possible Contracts

| About: Uni-Pixel, Inc. (UNXL)

Uni-Pixel Inc. (NASDAQ:UNXL) stock dropped $9.55, or 26%, to $27.19 on May 17, 2013, and the stock has displayed volatility over the last year. On May 18, 2012, the stock closed at $5.69 and since then a steady stream of reports about emerging technology had driven the stock price as high as $41.42. Most of the hype has been company-driven as to the new touchscreen technology that it is developing and could result in a lucrative opportunity. Media reports of a deal to license some of its technology with a major computer maker. Speculation on the street is Dell (NASDAQ:DELL) will partner with Uni-pixel, and Uni-Pixel's CEO Reed Killion has named Dell as the maker, but Dell has not publicly acknowledged the partnership.

Uni-Pixel has developed a touch-sensitive capability using copper-mesh film that sits under glass in touch-sensitive devices rather than using the current technology of an indium-tin oxide that other companies are developing. If PC makers select Uni-pixel's technology, it would send profits skyward and drive the stock price higher. Uni-Pixel's product is named Uni-Boss and the company claims it is cheaper and more responsive than current technology on the market.

During Dell's Q1-13 conference call Dell stated that there were some interesting, intriguing developments in the touch panel market that would allow it to regain some share in PCs, but stopped short of identifying Uni-Pixel as a partner.

Uni-Pixel has $15.7 million in cash, however, this is partly due to a series of secondary stock offerings. In August 2012, it sold 3.1 million shares, for a considerably lower price of $5.25 per share. Last month, it sold 1,374,250 shares for $32 per share, bringing its total share count to 12 million, and putting almost $44 million in the bank. Uni-Pixel has a negative cash-flow from a negative business operations over the past several years, but this contract could turn the financial woes around.

Uni-Pixel's CEO Killion says the market for touchscreen sensors like Uni-Boss could exceed $10 billion. Analysts expect the film to sell for $20 or more per square foot, and Killion says profit margins could be "north of 50%."

Uni-Pixel has a capacity to make 60,000 square feet of film per month in Texas, and it signed a deal in April 2013, with Kodak that will allow it to ramp up production at Eastman Kodak Company (EKDKQ.PK) headquarters in Rochester, N.Y. If the lucrative contract comes through for Uni-Pixel, Kodak will benefit and assist it from bankruptcy.

Investors have a decision to make. If they believe Dell and other PC makers will use Uni-Boss technology from Uni-Pixel, they can buy while the stock price is in the $20s and $30s and ride the gravy train with profits from this technology for at least the next three years. If the PC makers choose another company or possibly an unannounced or another developing technology, Uni-Pixel could plummet back down to the single-digits in price and struggle to become profitable. My recommendation would be to hold what one has and react quickly if Dell announces the partnership, or be prepared to sell if another technology beats Uni-Boss.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.