Fool's Eye View

[ October 5, 2000 ]

NXT: A Sound Investment

By David Kuo (TMFDragon)

Carburton Street, London -- To invest in high technology these days you need to have nerve and vision and preferably more of the latter than the former. A case in point is NXT (LSE: NTX), the audio technology specialist that announced its year-end figures this morning.

So What's Been Happening at NXT?

Turnover fell for the fourth year on the trot. This time sales declined another 20% to just under £13m sending the company into the red with pre-tax losses of £11m. To a traditional bean counter, the figures will most probably look somewhat depressing. So why would anyone even consider investing in a company that continually reports falling sales and declining profits?

The answer is a vision of the future. NXT through its advancements in sound know-how is now recognised as a leader in flat panel speaker technology. It has taken NXT four years to transform itself from traditional loudspeaker manufacturer to become a recognised expert in sound technology. A brave move by a management with vision, which recognise the need to innovate in order to stay ahead.

Is it Working?

It certainly appears to be working. The company has signed up over 200 licensees covering most of the major markets around the world and of which 50 are expected to be in production by the end of the next financial year. Licensees come in two flavours. General licensees produce components or assemble products and user licensees will distribute products under their own brands.

NXT has filed 1400 patents of which 450 have so far been granted. Additionally 94 new patents have been granted in the last twelve months. Intellectual property (IP) is the key to success for NXT and the protection of its IP will always be a key concern for the company in a world that appears to tolerate plagiarism. The company recognises the need to protect its IP and the need to remain vigilant in protecting its inventions.

There does not appear to be a shortage of areas where NXT's inventions can be exploited. The list of partners is impressive and an almost endless flow of opportunities. This morning, the company disclosed a deal with DaimlerChrysler to develop an in-car audio speaker with the car manufacturer's panel producer. This is just another of the many markets where NXT will find profitable business.

So What Should Investors Do Now?

It can take years to bring a product from development to the market place. It also takes the co-operation of three or four licensees to develop successful product. Investors need to have patience and a strong belief in the technology. There are no guarantees, short cuts or quick routes to profit in high technology. Only hard work!

Where Next?
NXT discussion board | website