DailyTrends.com Company of the Week: Peerless Systems (PRLS)
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I have spent quite a bit of time researching this company. In fact, I was so intrigued by their latest product that I spent almost three hours talking to the CEO at their headquarters here in El Segundo, California.
It seems to me that Peerless (PRLS) has done something so significant in the printing industry that its competitors will have to play catch up for the next couple of years.
Before I begin to let you know what it is that they have accomplished, a brief background on the Company would do some good.
Peerless Systems lets you peer at digitally produced images more easily. Peerless offers software-based imaging systems embedded in printers, copiers, scanners, and other digital devices.
Its products include designs for application-specific integrated circuits (ASICs), printer drivers, and network interfaces that let digital document companies like Adobe and Ricoh incorporate networking support or multifunction features into equipment.
Peerless also offers related engineering services, and signed a monumental deal with Kyocera Mita a couple months ago for just that.
For the past three years, the Company has been turning itself around under the helm of CEO Howard Nellor. From speaking to the man for several hours both on the phone and in person, he seemed cordial, informative, and intelligent.
Mr. Nellor was telling me how for the past 3-4 years, they have spent $20 million dollars developing a new technology for printers that allows essentially any printer to not only print better images, but faster as well.
With the development of this scalable technology, any printer company in the world can now have the ability to print 50, 60, 70, 80 pages a minute versus the normal 20 or 30 they are doing right now. The amazing thing about this is it is in COLOR!!
There is a huge transformation currently happening in the industry in which one is able to print color rapidly and as easily as it currently is to print monochrome (black and white).
Peerless was at the forefront of monochrome technology when it was taking off almost 10 years ago. In my eyes, history is going to repeat itself again for PRLS, but this time in color.
I expect the stock to sign another big OEM (Original Equipment Manufacturer) in the next 3-4 quarters. They signed an engineering and licensing deal with Kyocera Mita that will pay them two million dollars a quarter, plus royalties from Mita printers that use their technology.
Peerless expects to be profitable for the fiscal 2005 year, and in my eyes will see a considerable ramp up in the last quarter of the year as a result of the Kyocera Mita deal.
My 12 months price target is $3.20 a share, and it is only a matter of time before they license their technology to some larger printer companies moving forward.
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