Telit Communications received the thumbs up from broker Investec as a study on the global M2M communications sector revealed that the company’s share of the market jumped over 2010. Published earlier this week, the study by Beecham Research, a consultant specialising in the machine M2M communications market, reckons that Telit’s market share of the ‘modules’ market over 2010 rose from 12.4% in 2009 to 16.1% in 2010.
m2m ‘modules’ are small but critical hardware components at the heart of m2m technology and devices and use special m2m communications software. If Telit’s acquisition of Motorola’s m2m unit earlier this year is included in Beecham’s analysis, Telit’s share of the global industrial grade m2m modules market jumps to 22.2% on a pro forma basis.
More broadly, Beecham found that the market for industrial grade cellular m2m modules grew overall in line with its previous forecasts, with 39% volume increase offset by a price decline higher than 15%.
According to Beecham, the global m2m sector for industrial grade m2m modules expanded 17% in 2010 from $700m to $819m on an underlying basis, in line with its forecast from the prior year. Beecham is keeping its 2011 forecast flat at $925m.
The growing sophistication of the technology is being matched by an increasing number of applications, including in fields such as telematics, fleet management and the automatic remote reading of data – for instance gas meter reading – as well as security technologies, point-of-sale terminals and healthcare.
As far as Telit is concerned, m2m “turns data that has always been there into valuable information: new information that empowers individuals, businesses, the economy and the environment, in short, improves a nation’s health. It’s that simple, but the concept has huge ramifications”.
The company’s core business is the development, manufacture and marketing of communication modules for m2m applications. As an integrated manufacturer it owns intellectual property involved in the hardware, software and processes related to communication between different machines and between machines and people.
Certainly the potential for further growth in the market looks promising, auguring well for Telit’s prospects. Broker Investec, for instance reckons that at the moment there are around 150 million m2m devices out of a total potential of 50 billion.
The drivers for growth include increased legislation in areas such as eCall, a pan-European initiative which aims to link up emergency services across the region via telematic devices, for instance in cars, as well as tolling and e-metering.
Investec regards the Beecham report as positive news for Telit, underpinning its upbeat prognosis for the company’s prospects. Investec analyst James Goodman says: “We expect the results to corroborate market growth predicted by Beecham and we will be looking for further positive commentary around the Motorola integration.”
The Investec analysts are anticipating full year 2011 revenue will come in at just under US$200 million, with pretax profits of US$15.3 million, giving earnings per share of 10.2 cents. For 2012, they are looking for revenues of US$237 million, with pretax profits of US$23 million, giving earnings per share of 13.9 cents.
The group is headquartered in Rome, with R&D centres in Trieste and Cagliari in Italy, Seoul (Korea), Sofia Antipolis (France) and Tel Aviv (Israel). The 425-strong company boasts 20 sales offices worldwide and uses more than 50 resellers to cover 77 countries and over 2000 customers.
Source: www.proactiveinvestors.co.uk