Wednesday, 7 November 2007

Three Good Years With Icron Technologies

Icron Technologies (IT – TSX V)

In the summer of 2004 a Toronto based investment firm introduced us to a small but spunky company called Icron. It had high speed wired USB products that could drive data in real time over extended distances. Its dream was to make the technology work in the wireless world.

The stock barely traded, it was stuck in the $0.20 range, the market capitalization was around $4 million and very few people knew about the company. On the surface, this was not a rosy scenario. However, over 20 years we’ve seen more than a few situations where one had to scratch below the surface and every once in a while you found a nugget that suggested there could be a mine in the area. You’d just have to keep digging and have patience.

It was the summer of 2004 when The Howard Group decided to make its first investment in Icron as well as assist the company in building its public market following. We did so because Icron had a real business but also held the bluesky potential because of its work in the wireless area.

The dream started to take shape in the Spring of 2005 as the stock began soaring on the heels of a licensing deal with Freescale to incorporate Icron’s wireless technology into chips that the Motorola spin-off was developing. Unfortunately for Icron, Freescale ultimately decided to exit the wireless USB battleground and was subsequently bought by a private equity group.

The stock began a long decline because in the market’s mind, the dream of Icron making millions in royalties disappeared along with Freescale. It just became another business without a lot of sizzle.

However, underpinning everything are the facts that very few junior companies can lay claim to twelve quarters of growth, no debt, several million dollars of cash on hand, new found profitability, an increasing customer base and the ability to develop new technologies and products. All this was accomplished while keeping its fully diluted shares under 25 million.

While it has been quietly going about its business it is now being noticed as is evidenced by the fact that a few months ago Paradigm Capital issued a $2 target on the stock. Cormark Securities is also writing about Icron and several other analysts are now watching.

Is the bluesky gone? We don’t think so! It is our belief that the dream will be rejuvenated in the market’s mind sometime in 2008 based on progress Icron has been making behind the scenes.

Although we are no longer representing Icron, we will hold our investment and look for returns significantly greater higher than the current $0.80 stock price.

President & CEO Rob Eisses is the quiet type but we think he will be getting much more vocal in the new year about Icron’s future.

All the best.