Morgan Keegan comments on ID Systems (NASDAQ:IDSY) after they came away from Investor Day with increased confidence in the direction the company is headed. Significant attention and resources will be devoted to increasing the sales force and relationships with 3rd party distributors. Firm expects the company to realize many of these benefits from actions taken in 2007 in the 2H:08.
Pete Fausel, ID Systems' new head of Sales/Marketing, plans to implement a 5 point growth strategy:
1. Expand the customer base.
2. Improve customer benefit attainment (Increase the speed in which a customer realizes the benefits of ID Systems' products and this will lead to more deployments in a shorter period of time). The company plans to build an entire group around this concept starting with Roger Tenney, the ex Ford engineer that spear headed the Wireless Asset Tracking System roll-out at Ford.
3. Leverage Channel Partnerships. Firm sees there will be a number of new partnerships and distributors announced this year. Expectations are that, eventually, 50% of the company's revenue will flow from this channel. To date, the company has been nearly 100% reliant on direct sales.
4. Identify and Attack Vertical Markets. The big three appear to be Automotive, Government, and Aviation. The company plans to have its sales force become more specialized, changing from geographic coverage to industry coverage.
5. Expand in Europe. Europe offers larger opportunities for the company's products than the U.S. Currently, the company has one salesperson in Europe and no revenue to date. There will be growth in the sales and support network within Europe in 2007. In addition, there is a need to partner to both sell and install equipment in Europe.
Notablecalls: Given the chart, looks like the market liked what IDSY was saying on the Investor Day. IDSY has been much like many other similar companies with little visibility into the earnings that tend to fluctuate quarterly.
These steps seem to be in the right direction, allowing better visibility and diversified revenue base. We may see some follow-up interest in the shares today, but wouldn't count on it.
IDSY 1-yr chart: