This Dog Still Won't Hunt

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IPIX (Nasdaq: IPIX) is flying high again today, ostensibly because the Federal Aviation Administration has said it's OK for Taser's (Nasdaq: TASR) zappers to fly the friendly skies. What? You say it makes no sense that this realty-picture-outfit-turned-Web-picture-outfit-turned-security-outfit would rise based on good results for a product that's completely unrelated? Welcome to the brave new world of "security."

IPIX, like another firm with questionable security credentials, Mace Security (Nasdaq: MACE), trades all over the place because there are plenty of folks out there who want to make a bet on fear.

When I checked in on the latest results, I noted that the firm prefers not to make year-over-year comparisons because it makes things look bad. True to form, the latest numbers also compare to the last quarter. No surprise; who would want to highlight the fact that the former IPIX commanded gross margins in the 65% range, while the new one would be lucky to hit 20%?

I suppose it's only fair to look at the bright side of things for at least a moment. Revenues rose 34%, and aggregate gross margins were up from the second quarter. But gross margin sank on the very segment that's supposed to be supercharging future growth, the security biz. The loss from operations was virtually identical to the last quarter's, although it looks better, at $0.18 per share, because of 23% share dilution.

With the company's total sales of $1.7 million for the quarter and a market cap around $137 million, the stock is definitely not cheap. And with $20 million in the bank and burning $3.5 million per quarter with little hope of stopping that hemorrhaging in the near future, this company is still a dog. There are dozens of companies out there slugging it out in the security camera business, and, as colleague Rick Munarriz pointed out a while back, polite hometown mentions from Homeland Security Chief Tom Ridge do not an investment make.

It would be easier to find anything at all to like about this stock if management PR didn't smell so much like snake oil. It's all about "expanding," whether that means signing on a Russian retailer or is just a fancy way to describe the process of calling off a deal. Read past the headlines and you'll find not a shred of detail to support the enthusiasm, or, worse yet, you'll get the distinct feeling that you're being snowed. That's the mark of an investment to avoid.

For related Foolishness:

• Trading sardine or eating sardine? What do you want?
• Check your portfolio for the real terror alerts.
• Should you be focusing on IPIX?

Like IPIX, Seth Jayson once made a tripod adapter to get seamless panoramas. At the time of publication, he didn't have positions in any company mentioned. View his stock holdings and Fool profile here . Fool rules are here .