Real live raygun maker Ionatron (NASDAQ:IOTN) reports Q2 2007 earnings results tomorrow morning. Want to know what Wall Street expects to see? Read on. Want to know what really matters? Read on a bit more.

What analysts say:

  • Buy, sell, or waffle? A single analyst follows Ionatron, rating it a buy.
  • Revenues. This analyst expects to see $3 million in revenues tomorrow, 50% better than in last year's Q2 ...
  • Earnings. ... and more than a halving of the net loss to $0.03 per share.

What management says:
To me, Ionatron's 8-K filings with the SEC read like a case study of management self-enrichment. While not bothering to place a copy of last quarter's earnings release in the files (perhaps management didn't consider an "earnings" release material because there were no earnings?), Ionatron did inform us of a pay raise for COO/CFO Kenneth Wallace (salary: $210,000 per year), and of executive VPs Joseph Hayden and Stephen McCahon's plans to sell stock under 10b-5-1 plans.

The good news here is that the selling doesn't start until Ionatron's shares break above $5. And that doesn't look to be happening any time soon.

What management does:
Is this horse dead, yet? Then let me give it one more kick, just to be sure: Ionatron is getting worse, not better. Over the last six quarters, we've watched gross margins -- gross margins, as in how much more Ionatron's products sell for, than it pays for the components used to make them -- slide inexorably from positive to negative. In other words, at last report, Ionatron's products are quite literally worth less than the sum of their parts.

Don't even ask me about the operating and net results. They're just too sad.

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

5.9%

5.9%

5.4%

2.7%

(0.9%)

(9.5%)

Operating

(22.7%)

(29.1%)

(42.1%)

(67.2%)

(112.1%)

(148.7%)

Net

(19.2%)

(25.3%)

(44.1%)

(78.4%)

(174.6%)

(233.9%)

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
As far as I can tell, Ionatron's stock is still trading. So apparently, some "investors" out there just aren't getting the message. The horse has been beat to death, then beat some more into horse-steak tartar, but they still expect it to stand up and canter off to win the Kentucky Derby.

So let me put this as plainly as I can. Ionatron is not Lockheed Martin or General Dynamics or Raytheon. It doesn't make valuable products, earn billions in profits, or generate gobs of cash. Nor is Ionatron TASER (NASDAQ:TASR). It doesn't generate even enough profit that you can stick a P/E on it and say "There. That's how overpriced it is."

No, Fools. What Ionatron is, is Xybernaut. It's a profitless, $220 million-dollar pipe dream on a fast track to zero. Get out while you still can.

Follow this company's earnings ion trail in:

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Fool contributor Rich Smith does not own shares of any company named above. Why do we tell you this? Because The Motley Fool has a disclosure policy.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.