CEO: Taser to increase R&D spending
Taser International, Inc. (Nasdaq:TASR) CEO Patrick Smith said that although the first quarter is seasonably weak, the stun-gun maker is proud of year-over-year growth in a challenging economic environment. Smith made the comments during a morning conference call.
Going forward, Smith said the company will increase its research and development spending. During the first quarter, Taser more than doubled its research and development spending to $2.1 million, compared with $1 million a year earlier.
“We believe that now is the time to make bold moves to extend our technological leadership,” Smith said.
The CEO invited investors to attend Taser’s annual shareholder meeting on May 28 at the company’s headquarters in Scottsdale, Ariz.
Although the company has seen municipalities cut back on spending for police forces, CFO Daniel Behrendt said Taser is not cutting back on its sales efforts.
“The U.S. economy is certainly a challenge for us. Municipal budgets are a little tighter than they have been in previous years,” Behrendt said. “Our plan is that the new products and new markets that we’re focused on will help to offset any weakness in our U.S. law enforcement business. We still feel very good about the international business, the military, the private security, the corrections and the consumer business.”
“We’re going to be engaging in some very interesting business this year and we’ll start to open the kimono a little bit at our annual shareholder meeting,” Smith said. “It should be an interesting time for us — for those shareholders who have been with us a long time. We’re ready to take this company to the next level.”
Six liability lawsuits against Taser were dismissed during the first quarter. At the end of the quarter, 67 wrongful death or injury lawsuits against Taser have been dismissed.
“Our strategy is based on fighting aggressively in these cases and bringing forth the best scientific evidence available,” Smith said. “When juries and judges get a chance to see the evidence, we’ve had a perfect record so far.”
Citing the unpredictability of juries, Smith cautioned that Taser does not expect the perfect litigation record to continue.
“You cannot base a strategy based on perfection,” Smith said. “We will lose one, guys. But remember — that’s why we have insurance.”
Before Thursday’s opening, Taser posted first-quarter earnings of $1.2 million, or $0.02 per share, versus $0.5 million, or $0.01 per share, a year earlier. The results missed Wall Street’s expectation of earning $0.05 per share.
Quarterly revenue jumped 47% to $22.5 million from $15.3 million a year ago. However, the revenue surge still managed to miss Wall Street analysts’ expectation of $26 million in revenue.
“We’re proud of the results our team was able to turn in during a challenging economic environment in the United States,” Smith said.
During the first quarter, Taser added 304 police agencies testing and deploying its products, bringing the total to more than 12,700 agencies.
Taser produced and launched its infomercial during the first quarter, pushing sales, general and administrative expenses up 20% to $9.1 million from $7.6 million a year earlier. The company has been running the infomercial on TV for about eight weeks, Smith said. The CEO said Taser will continue to test and invest in infomercials.
“We’ve spent about $175,000 on media. The revenues are exceeding our media spending, but when you include all costs, we’re not yet above breakeven,” Smith said. “At a minimum, it is a very effective subsidizing program, because it is a great way to educate the consumer.”
In midday trading, TASR shares are plunging 20.49%, or $1.93, at $7.49. Over the last 52 weeks, shares have ranged from $7.30 to $19.36.
