* Q4 EPS $0.07 vs est $0.02
* Net sales rise 31 pct
* Expects R&D costs to remain flat
* Shares rise as much as 12 percent
(Recasts; adds conference call details, updates share
Feb 19 Stun-gun maker Taser International Inc
(TASR.O) reported better-than-expected quarterly results,
helped by lower expenses, and said it expects research and
development (R&D) costs to remain flat, sending its shares to a
Taser shares, which have more than doubled since touching a
low of $3.11 in March last year, were trading up 9 percent at
$7.15 in high volumes Friday afternoon on Nasdaq.
Rising R&D spending has been a drag on the earnings of the
company, whose Taser guns incapacitate people through a
50,000-volt jolt of electricity.
"We do expect R&D expenses to relax in 2010, as the launch
costs for Axon, X3, Shockwave and XREP are behind us," Chief
Financial Officer Dan Behrendt said on a conference call.
The company expects to see more stimulus-driven orders in
the first half of 2010, the CFO said.
"Over the next 18 months, we could see revenues trend
significantly higher based on pent-up demand for Taser products
unleashed by a continued economic recovery," Merriman Curhan
Ford analyst Eric Wold said in a note dated Feb. 18.
Taser -- whose guns are bought not only by the police,
military and correction facilities, but also by individuals and
casinos -- has seen an improvement in domestic law enforcement
The Scottsdale, Arizona-based company's shares touched a
high of $7.34 earlier in the day. Nearly 4 million shares
changed hands by afternoon, more than five times the stock's
10-day moving average volume.
LOWER SG&A DRIVES Q4
In the fourth quarter, the company's net income rose about
23 percent to $4.6 million, or 7 cents a share. Net sales rose
31 percent to $34.5 million.
Sales, general and administrative expenses fell 10 percent
to $9.8 million, while R&D costs rose nearly 7 percent to $4.8
Analysts on average were expecting earnings of 2 cents a
share, on revenue of $31.1 million, according to Thomson
The company recognized $3.5 million of deferred revenue in
the fourth quarter, all related to the trade-in program
allowing agencies to upgrade to the Taser X3. The X3 is a
multi-shot electronic gun that can engage multiple targets.
Taser expects a slow ramp up of X3 over the course of the
"With the 2010 introductions of the Axon and the
Protector... Taser should start to see increased revenue
visibility as well as a higher gross margin profile from the
additional revenue streams," analyst Wold said.
Axon is an audio-video device that can be connected to stun
guns to grab footage of incidents.
The Protector is an application that gives parents the
ability to supervise their children's mobile phone usage and
monitor driving behavior.
Federal and military sales rose significantly during the
quarter, partly due to the first order of 2,500 X26 electronic
control devices and related accessories.
International sales represented 17 percent of net sales.
Britain, France, New Zealand, Canada and Australia are some of
the key international markets for the company.
(Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by
Aradhana Aravindan, Anne Pallivathuckal)