Will iGo Power Your Portfolio?
The shares of iGo (NASDAQ: IGOI), a provider of accessories and power management solutions for the electronics industry, have been hot this week after last Friday's SEC filing, in which the company's CEO, Michael Heil, announced a purchase of 100,000 shares.
The stock jumped sharply higher on Monday from $0.87 to as high as $1.25 per share and is still trading above $1 per share despite giving up most of the gains on Tuesday. iGo has had a significant downtrend this year, as the stock is down about 80 percent from its highs of $5 per share in January. However, the insider share purchase indicates that iGo's future might hold something that is going to reverse the bearish trend.
Most notably, iGo is jointly developing a new chip, the iGo Green, with Texas Instruments (NYSE: TXN).
“What we're doing is developing a chip that manufacturers of laptop computers and home gaming systems, for example, could embed into the power adaptors that ship with their products,” iGo spokesperson Tony Rossi told Benzinga this morning. “By using our chip they'll be able to reduce the amount of standby power that their products consume.”
According to Rossi, the iGo Green may be in a class all its own. “Nobody does this right now,” he said. “There are a number of other chip companies that have what are called power management products – chips that help control the amount of energy utilized by devices. But nobody has anything that's directly comparable. But companies like Power Integrations (NASDAQ: POWI) are certainly players in this field.”
While laptops and game consoles could soon take advantage of this technology, don't expect to see it in tablets or other small, portable devices anytime soon.
“We're not aiming for tablets because they're not huge consumers of standby power,” Rossi explained. “Standby power, if you don't really know, is energy that is drawn from the outlet even when a device doesn't need it. So when you think about a laptop computer or a home gaming console like a Wii, they have those big brick power adaptors. That's typically the sign of a device that consumes a lot of standby power. Your smaller electronic devices don't typically have those types of power adaptors and they don't consume as much standby power, so it's not really a significant issue for [tablets].”
New Products: Alkaline Rechargeable Batteries
In addition to the iGo Green chip, which is due in the first quarter of 2012, iGo has also developed a slate of rechargeable alkaline batteries.
“Most rechargeable batteries on the market are nickel metal hydride,” said Rossi. “We're the only ones with a rechargeable alkaline battery. The difference is, one, our alkaline batteries don't have any toxicity in them. Nickel rechargeable batteries have a toxic metal in them. And ours are much lower cost.”
Rossi said that you can buy a four-pack of iGo's rechargeable alkaline batteries for about $8, while the average price of a four-pack of regular (disposable) alkaline batteries is about $4.99, “depending on where you get them.”
“After about two charging cycles [with iGo batteries], you've already made your money back,” he said. “You can get up to as many as 20 recharges off of our batteries, so over the life of them you can save around $90 by using rechargeable batteries.”
That, of course, assumes you can actually find the batteries in store. “There's quite a bit of obstacles to building that business because there's essentially a duopoly in the disposable battery market between Duracell and Energizer (NYSE: ENR),” said Rossi. “They would prefer that consumers don't use rechargeable batteries because it cuts into their businesses, and they have relationships with retailers and apply pressure to them to not carry rechargeable batteries.
“We think we have a good product and we're steadily building out the distribution for it, but there are certainly some impediments to getting broad distribution, but we're slowly grinding away at it.”
The traders who believe that iGo Green will be a game changer might want to go long iGo. Additionally, Texas Instruments might benefit from the success of iGo Green.
The traders who think that iGo Green and rechargeable batteries will not be as great of a success story as the company expects may want to either short iGo or go long one the battery makers, such as Energizer.
Story and interview co-authored by Louis Bedigian and Tuomo Kallio.
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