The penny share market is full of companies with great ideas, top notch technology and apparently limitless sales potential – and yet they fail to make any money.
One could mention; Corac (CRA), Transense Technology (TRT), Lombard Medical Technology (LMT) and Ceres Power (CWR) in this context and there are many more besides.
It’s easy to develop a fascination with clever inventions and to convince yourself that one day they must make you a fortune. The problem is that, if the golden dawn of profitability is ever reached at all, it can take an awfully long time. And by then so many new shares will have been issued to keep the whole venture afloat, that any surplus must be divided into the thinnest of slices for patient shareholders.
Another that looks good on paper but has so far delivered only promises and losses is Seeing Machines (SEE). Recently it delivered the usual combination of annual losses (about £1.4m this time) and sunny optimism (‘an increasing number of opportunities… an improving pipeline… confident of a continued revenue growth along with an improved financial performance’). And yet, the stock has yet to take off. Well that could soon change.
Why big manufacturers are lining up for Seeing
Seeing Machines has attracted its share of loyal investors – all enthused by its ability to track your facial movements. The idea is simple. By using a camera to watch the way in which your eyes and face move, it is possible to determine which way you are looking, how well you are concentrating, and whether you are falling asleep. How do you make money from that?
Well, Seeing Machines, which has its headquarters in that quietest of all capital cities, Canberra, already has two confirmed groups of customers. The first, including Toyota, Jaguar, Land Rover and Boeing, consists of motor vehicle and aeroplane manufacturers who want to design the best possible driver’s cockpit.
By tracking the way in which the driver’s head moves, it is possible to discern how easily he masters the dashboard. Does he, for instance, have to divert his eyes from the road ahead in order to find the radio volume control? By watching the driver with a camera and then analysing the results designers can find the perfect cockpit configuration – which perhaps explains why nowadays they seem identical from one car to the next.
… and big mining is interested too
Also using the Seeing Machines system are the big mining companies. Taking ore from the bottom of a pit up to the top involves a long, circular and very slow drive in a truck about the size of the Queen Mary. With the sun beating down on the roof, and the sheer monotony of the task causing the mind to wander, it is all too easy to fall asleep. It happens, with results that can be disastrous for the driver and very expensive for the miner.
So now big mining groups such as BHP Billiton, Freeport-McMoran, Xstrata and Newmont have adopted Seeing Machines’ solution, which places a camera on the dashboard and sends out an alert as soon as the driver’s head starts to loll.
Seeing Machines has had to overcome a few problems here, not least the fact that these trucks are cleaned inside and out with high pressure water jets, which is not ideal treatment for electronic gadgetry. The camera units have now been ruggedised and Seeing Machines should secure further orders from the miners this year and next. And that is not all…
How Seeing could finally capitalise on its great technology
Seeing Machines has also applied its technology in two other areas. One is computer gaming, where a camera built into the side of the computer screen can follow the eyes of the user and adjust the image on the screen accordingly.
And the other is a potentially improved treatment for glaucoma, with a device that can measure the involuntary reaction of the eyes to light stimulus. On top of this new chief executive Ken Kroeger sees a chance to push the remote observation of drivers onto highways, starting perhaps with trucks and coaches.
So there is no shortage of possibilities. But according to Kroeger, that has been part of the problem. Seeing Machines is too small to pursue several large global markets simultaneously. One possible answer would be to offload the technology in some applications in return for licence fees. By focusing on a limited number of potential customers, Seeing Machines might finally reward its loyal shareholders with the sight of a profit. Let’s keep a close eye on this stock.
• This article is taken from Tom Bulford’s free twice-weekly small-cap investment email The Penny Sleuth. Sign up to The Penny Sleuth here.
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