What: Shares of stun gun maker TASER International (AXON 1.27%) plunged 13% on Tuesday after its quarterly results disappointed Wall Street.
So what: TASER shares have slumped sharply over the past six months on concerns over increased spending on its Axon camera/video platform, and today's wide Q3 earnings miss -- EPS of $0.03 vs. the average analyst estimate of $0.08 -- only reinforces those worries. So while TASER's revenue increased a solid 7.7% over the year-ago period, gross margins slipped to 61.7% from 64.7% in the year-ago period, giving investors plenty of negative vibes over the profitability of its long-term product mix.
Now what: Management remains confident that quickly penetrating the camera/video market is indeed the right one.
"Currently, we're witnessing a major shift and exciting transformation of TASER's business and the recent announcements of Axon Fleet, Axon Body 2 and the expanded Axon platform provides an insight into the strategic vision held by TASER," said board member Hadi Partovi. "The Axon software platform with multiple hardware extensions provides a unified law enforcement experience from TASER similar to what consumers see today with the Apple or Android ecosystems. This lays the foundation for tremendous growth and is the beginning of an incredible story."
When you couple TASER's cash-rich balance sheet with its ice-cold stock price, now might be an opportune time to buy into that long-term story.
