New Buy…..

• Posted by ToddSullivan
• on October 5th, 2009

I found a small company with some amazing potential. The kicker is that for every $1 worth of stock I buy, there is $.97 of cash and inventory sitting on the company’s books and zero debt. Let’s go look.

The company is iGo. From their site:

iGo, Inc., based in Scottsdale, Arizona, develops and markets universal chargers for laptops and mobile devices such as mobile phones, Bluetooth® headsets, smartphones/PDAs, MP3 players, portable gaming devices, digital cameras and more.

The Company’s patented tip technology enables users to charge thousands of models of mobile devices with a single charger through the use of interchangeable power tips. iGo’s offers a full line of chargers for charging at home, in the office, on an airplane, in the car or from batteries. By using these revolutionary chargers and associated tips – which, in some products, enable users to power multiple devices simultaneously – mobile device users can save money and eliminate the extra weight and jumbled power cords associated with carrying multiple chargers.

iGo, Inc. is dedicated to providing the most innovative and streamlined mobile solutions based upon the Company’s patented, cutting-edge technology. In addition to the Company’s charging solution, the Company also offers accessories for the mobile device market.

iGo primarily has four things going for it
1- Products that simplify its most likely customer’s lives
2- A “green” product that is the only one in its niche (patent protected) AND has a rapid payback on investment (<6 months)
3- An extremely rapidly expanding distribution channel for its products
4- A dirt cheap valuation

Last earnings release:

• Q2 2009 net income of $134,000 compared to Q2 2008 net loss of $66,000
• Net cash and investments increase to $33.6 million
• New iGo GreenTM technology is first power management solution to automatically combat “Vampire Power”

SCOTTSDALE, Ariz.–(BUSINESS WIRE)–Jul. 22, 2009– iGo, Inc. (Nasdaq:IGOI), a leading provider of power management solutions, today reported financial results for the second quarter ended June 30, 2009. Net income attributable to iGo, Inc. was $134,000, or $0.00 per share, in the second quarter of 2009, compared with a net loss of $66,000, or ($0.00) per share, in the same quarter of the prior year. Total revenue was $15.1 million in the second quarter of 2009, compared with revenue of $18.6 million in the second quarter of 2008.

Excluding the operating results of the divested businesses, net income was $84,000, or $0.00 per share, in the second quarter of 2009, compared to a net loss of $220,000, or ($0.01) per share, in the second quarter of 2008. A detailed reconciliation of GAAP to non-GAAP financial results is provided in the financial tables at the end of this release.

Michael D. Heil, President and Chief Executive Officer of iGo, commented, “We were pleased with our execution in the second quarter, as our revenues remained stable on a sequential quarter basis, despite the continuing economic weakness and the winding down of our primary private label relationship. As a result of our operating results and positive changes in working capital, we were able to further strengthen our balance sheet and increase our balance of cash, cash equivalents and short-term investments to more than $33 million.”

Listen to the most recent earnings call from July 22nd. This call, after seeing the subsequent event below has to make one very optimistic about what lay ahead. the call is about 1/2 hr. but worth every minute. :

In that call management mentioned they “were talking” to other retailers about expanding their presence in other outlets.

Like all our buys we are looking for a catalyst to unlock that value.

Witness just 2 months after the above call:

iGo(R) Netbook Charger to Be Sold at Verizon Wireless Stores
SCOTTSDALE, Ariz.–(BUSINESS WIRE)–Sep. 14, 2009– iGo (Nasdaq: IGOI), a leading provider of power management solutions, today announced that it has started shipping the new iGo® Netbook Charger to approximately 2400 Verizon Wireless stores nationwide. The charger will begin appearing in Verizon Wireless stores in the coming weeks.

The iGo Netbook Charger utilizes iGo’s patented tip technology to power both netbooks and mobile devices with one charger while at home, in the car, or in a plane. The iGo Netbook Charger can be utilized on virtually any model of netbook.

“Verizon Wireless is a driving force in the growth of netbooks and we are pleased to work with them to address the emerging power needs of their netbook customers,” said Michael D. Heil, Chief Executive Officer of iGo. “Like netbooks, our new chargers are lightweight, making them ultra-portable and convenient for netbook users to bring along with them wherever they go. They are the perfect solution for helping netbook users continue emailing and browsing the Web whether they are staying local or traveling internationally.”

The iGo Netbook Charger provides safe and quick charging, and also includes a USB cable to provide easy charging for other devices such as mobile phones, digital music players, Bluetooth® headsets, digital cameras, and gaming devices. The iGo Netbook Charger also works worldwide, eliminating the need for a voltage converter and is the perfect accessory for traveling abroad.

This is a huge overnight expansion on the retail network not even close to be being realized in the stock price

Now remember from the call the other outlets that iGo had just begun selling merchandise to. Those initial results will start showing up in this quarter’s results (most likely released 10/22) with the Verizon results being recognized in Q4 and Q1 2010

In 2008 they gave an investor presentation in which the following slides appeared:

What is significant here is that both products were delivered on time without any delay. That is important because it shows management delivers on expectations it sets (so far).

Now for the “green” aspect and investment payback, here is the applicable slide. The key here is that this technology has uses far beyond its current ones (think appliances of all type, TVs etc) and can be licensed for those at a huge profit for iGo.

iGo has had a huge run from $.54 in April. Are we too late? Not in my opinion. If we look back to that period, iGo was laying off workforce, had upper management changes, had a private label contract terminated on them by Targus and was involved in litigation with Comarco.  While its valuation then was far cheaper than now, for me, there was much too much uncertainty surrounding the company’s future.  iGo this spring was an truly selling at less than what it could be broken up for. But for me, at that time, my concern was that the outstanding issues surrounding the company would destroy that value before it could be realized. That fear is now all but gone.

Those question marks have since cleared and the Verizon deal gives us more light into the future.  Even with the recent run, it is still essentially trading for cash and inventories, you get the business results (who’s prospects are looking increasingly better by the day) for free.

So to recap, we have a share price of $1.15. Buying it at that price gives us $1.01 in cash, $.12 in inventory and $.23 in receivables for a total of $1.36 or 18% higher than the current share price with no debt.  I like it…

Latest 10Q:
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