OTIV's price per share has fallen over 90% since its high in 2006. The investment community has shied away from OTIV because of a management team that has not been able to deliver consistent revenue growth or profitability in their 20 year history.
The price per share of OTIV has recently risen from a low of $1.25 (July 12, 2012) to a high of $1.55 today. Here are some of the reasons that may have caused this 24% increase in the PPS.
1. Investors are speculating in a positive result for the patent infringement lawsuit with TMobile (DTEGF.PK). Both parties have a scheduled meeting with the judge on August 3, 2012. This lawsuit alleges that T-Mobile USA, Inc. sells Near Field Communication (NFC) enabled phones that infringe OTI's U.S. Patent No. 6,045,043.
2. The board of directors may finally be listening to shareholders and effecting a change in company management. In my opinion, management has misled shareholders regarding what are "pilot" programs in the company's press releases, and in a 2009 conference call, they talked about programs in China that never seemed to materialize. A recent article regarding the growth of Near Field Communications point of sale terminals reveals a 17% compounded annual growth rate, which is way above the growth rate of OTIV. Comparing this report to OTIV's performance, one could conclude that OTIV's management is underperforming the industry. OTIV's management is failing, and in my opinion, the company's board of directors should exercise their fiduciary responsibilities and replace company management.
3. The company maybe in the final stages of additional licensing agreements for their intellectual property portfolio. The Near Field Communications industry has standardized procedures for the way cell phones and readers will communicate, and OTIV holds valuable patents in this area.
4. Dissident investors Jerry Ivy and/or Marc Silk may initiate a proxy fight for board seats or a proxy fight to replace current management. Both Ivy and Silk report average investment costs of $3/share. and according to their 13D filings, they both may have initiated discussions with the board of directors.
5. The investment community may be realizing the value of OTIV's intellectual property. AuthenTec (AUTH) recently agreed to be acquired by Apple (APPL). APPL agreed to pay $355M for AUTH, giving AUTH shareholders over a 60% premium. A 355M purchase price for OTIV would be over $10/share, which is what many OTIV investors speculate about the worth of OTIV's intellectual property. AUTH has very similar comps to OTIV, and holds "credentialing" patents for NFC. OTIV's intellectual property is about the 2way communication between the smart phone and the reader. There may be speculation that OTIV is a takeover candidate.
I believe that any one of the above events will cause shares in OTIV to rise further.
Disclosure: I am long OTIV.