General: From Insignia 2011 Annual Report:
"Insignia Systems Inc. (the "Company") markets in-store
advertising products, programs and services to consumer packaged
goods manufacturers (customers) and retailers. The Company has
been in business since 1990. Since 1998, the Company has been
focusing on providing in-store advertising services through the
Insignia Point-Of-Purchase Services (
) in-store advertising program. Insignia POPS�
Insignia POPSign� program.
Insignia's POPSign is a national, account-specific, in-store,
shelf-edge advertising program that has been shown to deliver
significant sales increases. Funded by consumer packaged goods
manufacturers, the program allows manufacturers to deliver vital
product information to consumers at the point-of-purchase. The
brand information is combined with each retailer's store-specific
prices and is displayed on the retailer's unique sign format. The
combining of manufacturer and retailer information produces a
complete "call to action" that gets consumers the information
they want and need to make purchasing decisions, while building
store and brand equity.
For retailers, Insignia's POPSign program is a source of
incremental revenue and is the first in-store advertising program
that delivers a complete "call to action" on a product-specific
and store-specific basis. For consumer packaged goods
manufacturers, Insignia's POPSign program provides access to the
optimum retail advertising site for their products - the retail
shelf-edge. In addition, manufacturers benefit from significant
sales increases, short lead times, micro-marketing capabilities,
such as store-specific and multiple language options, and a wide
variety of program features and enhancements that provide unique
The company's Internet address is www.insigniasystems.com.
Here is a example of their product:
The biggest threat I see over a long period of time more than 10
years is certainly their biggest competitor Valassis and News
America. They are much bigger than Insignia. And that's a sizable
moat over Insignia.
Why should we not care too much about the risk from News
corp. ( News America) for the next 10 years?
From Insignia's 2011 Annual Report:
"On February 9, 2011, the Company and News America entered into a
settlement agreement to resolve the antitrust and false
advertising lawsuit that had been outstanding for several years.
Pursuant to the settlement agreement, News America paid the
Company $125,000,000, and the Company paid News America
$4,000,000 in exchange for a
10-year arrangement to sell signs with price into News
America's network of retailers as
News America's exclusive agent
SOURCE: Insignia Systems Inc. press release May 2, 2012, 4:05
"Our relationship with News America continues to improve as we
work more together. The vast majority of the issues that
encumbered this agreement are now resolved and we are working
with News America in such a way that we believe that both
companies can benefit from this agreement. "
Companies that have no debt can't go bankrupt.
Insignia has $20 million of cash and zero long-term debt.
They learn from the past, live for the present and are optimistic
about the future.
They know if they have done poorly in the first quarter they
accept that fact and they are working to change it by cutting $3
million per year in expense as they start in march. A management
that can talk about their mistake that's really a great
management. They are also really optimist about the future,
that's a sign of great management too. They are facing big
challenge but they have the courage it need to act and do the
good think for the share holder and their business.
SOURCE: Insignia Systems Inc. press release May 2, 2012, 4:05
CEO Scott Drill commented, "The results in the first quarter
of 2012, while disappointing, were in-line with our estimates for
quarterly performance announced a couple of months ago.
These poor results are not acceptable and that was the
driving force behind our decision to restructure our operations
. The restructuring should remove over $3 million of expense on
an annual basis. As the charge related to this restructuring was
booked in March, the Company will not realize any financial
benefit from this reduced expense until the second quarter of
2012 and beyond.
This expense reduction allows us to be profitable at
levels, while not affecting our ability to provide our customers
with the same superior, timely performance they are used
They are also really conservative in the way they are spending
the cash they have. So far it has give great results to
shareholders because they give back good dividends and repurchase
a lot of stocks. They didn't try to waste that money on overly
large expansion projects, and that's good.
Insignia Systems has 20.2 million of cash, $26.4 million of
shareholder's equity and $26.5 million market cap.
The maximum risk is about 25% at $1.47/share. If the stock goes
lower it will be like buying a dollar at a discount. So I see low
downside risk, but the upside outcome could be good.
Can we see more share repurchases?
Source: 2011 Annual report
Stock Repurchase Plan
On February 22, 2011, the Board of Directors authorized the
repurchase of up to $15,000,000 of the Company's common stock on
or before January 31, 2012. On May 25, 2011 the Board amended the
plan to increase the maximum share purchase amount from
$15,000,000 to $20,000,000."
From this 20Millions at date of December 31 2011, 10 millions
have been repurchase. At December 31 2011, they had 15,229,000
share outstanding with 10Milions left to spend. At March 31 2012,
they had 13,611,000 share outstanding, if they buy it all at the
peak of this period at 2,20$ a share this mean they have spend
(15,229,000 - 13,611,000) x 2,20$/share = 3,29 Millions wish mean
they have a possibility to buy for a another 6.7Milions on 20,75
Millions in cash they are having at this period.
I see this stock with low downside risk the lower it
goes. At this price you would be able to buy a dollar for less
than a dollar. Maximum downside risk is 25%; possible gain with
the management in place is infinite. With Scott Drill as CEO, I
believe that this company can do really well over time.
Trading at: $1.96 4:00 p.m. on 3/5/2012
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