Exhibit 99.1
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[LOGO]
It pays to be well connected
Joseph Ram
President and Chief Executive Officer
Jeff Klausner
Chief Financial Officer
March 15, 2006
Montgomery & Co Technology Conference
Santa Monica, CA
[LOGO]
Safe Harbor Statement
This presentation contains forward-looking statements made in reliance upon the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, IFO’s views on future fundraising plans, profitability, revenues, market growth, capital requirements and new product introductions and any other statements identified by phrases such as “thinks,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “goals” or similar words.
The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Some of these uncertainties and risks include, but are not limited to, the demand for our products, our ability to obtain our products from our suppliers, our ability to maintain commercially feasible margins given significant competition, and other factors. In addition, references to past operating results should not be considered to be indicative of future performance.
Readers, attendees and those listening are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. InfoSonics undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances that arise after the date hereof. Readers, attendees and listeners should carefully review the risks described in other documents that InfoSonics files from time to time with the Securities and Exchange Commission (“SEC”), including our Form 10-K for the year ended December 31, 2004 and our Forms 10-Q for the quarter ended September 30, 2005 and prior periods.
1
Company Overview
InfoSonics customizes, distributes and supports
wireless handsets, devices and accessories for carriers
in the United States and Latin America
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Founded in 1993 |
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Long track record of profitability |
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Substantial opportunity |
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Explosive market growth |
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Increasing functionality of wireless devices |
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Primary vendor alignment |
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Samsung |
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VK Mobile |
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Leading provider of value-added services and solutions |
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Headquartered in San Diego, CA |
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Investment Highlights
• Substantial growth opportunity
• US replacement/upgrade rate greater than 75%
• Technological advances continue to drive handset upgrades
• Latin America, is one of the top three regions in terms of growth
• Critical Link in Supply Chain
• Attractive and solidified partnerships with both vendors and carriers
• Carriers and handset vendors continue to use distributors in the supply chain process allowing them to focus on their core businesses
• Latin America and Tier 2 US carriers increasingly use customization and value-added services for branding and to drive higher ARPU
• Opportunities for field support and services continues to grow
• Limited Competition
• Few pure-play wireless distributors
• Proven track record of profitability and growth
• Business model produces stronger margins & profitability, relative to our peers
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Industry Dynamics and Key Success Factors
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Current Industry Dynamics |
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Key Success Factors |
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Handset growth |
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Build scale to capture opportunity |
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Align with leading vendors |
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Functionality and technology advances |
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Provide value-added software and services that address market trends |
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Target geographies that are poised for growth and the technology wave |
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Outsourcing trend |
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Fulfill intermediary position between vendors and carriers |
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Focus on solutions-based selling |
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Wireless
proliferation key to developing country growth |
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Build a local presence in key developing markets |
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Provide product characteristics that are attractive to local customer base |
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Handset Growth and Trends
Key Growth Drivers
• Functionality & technology advances driving replacement market
• New subscribers
• Emerging market growth rate stronger than US
• Phone number portability
• High repair costs lead to increased new phone purchases
• Industry consolidation
North America Handset Forecast
[CHART]
Latin America Handset Forecast
[CHART]
Source: Gartner, 2005
5
Functionality and Technology Trends
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“The future drivers of handset sales growth are going to be 3-D gaming and multimedia.”
Paul Jacobs, President of Qualcomm’s Wireless and Internet Group
• Streamlined form factors
• Mobile email
• Camera phones
• Integrated MP3 players
• Increased battery life
• Mobile game capability
• Increased carrier ARPU through value-added services
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Benefits of Outsourcing of Services
Outsourced customization, distribution and support enables handset vendors and carriers to focus on their core businesses
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Vendor Benefits |
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Carrier Benefits |
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Focus on core business of developing new handsets |
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Focus on core business of providing network coverage |
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Build global reach with limited investment |
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Gain access to potentially new handset manufacturers |
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Meet local consumer demands regarding applications and content |
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Provide customers with latest applications |
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Selected Vendors |
Selected Carriers |
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7
Competitive Landscape
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Target Markets |
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U.S. RSAs, Latin America |
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US Tier 1’s, Europe & Asia Global Carriers |
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Mexico, Chile, U.S. |
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Markets Dominated |
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Latin America |
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U.S., Europe, Australia |
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None |
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Primary Handset Alignment |
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Samsung |
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Nokia |
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Motorola |
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Competitive Barriers |
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Nimble, Innovative |
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800-Pound Gorilla |
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None |
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Way to Compete |
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Value-Added Services;“Handsets Sold” |
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Fulfillment Strength;“Handsets Touched” |
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In transition |
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2005 Revenues (millions) |
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$ |
146 |
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$ |
2,140 |
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$ |
987 |
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YoY Revenue Growth |
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99 |
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21 |
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% |
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Gross Margin |
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8.3 |
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Adj. Operating Income |
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2.6 |
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(0.7 |
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Net Income (from continuing Ops) |
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1.6 |
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(0.7 |
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Source: Company filings
CellStar financials for 12 months ending November 30th.
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Wireless in Developing Countries
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“Latin America continues to be CDMA’s fastest growing market. We expect to see over 70 million Latin American CDMA users by 2009.”
The CDMA Development Group
“GSM remains the fastest growing and proven global technology in Latin America and the Caribbean, with 192% annual subscriber base growth.”
Erasmo Rojas, Director of 3G Americas for Latin America
• Latin American market growing faster than worldwide market:
• 2004: 69% growth
• 2005: 33% growth
• 2006-07: 30% projected growth
• Strong Growth Drivers
• Carriers transitioning networks from TDMA to GSM or CDMA
• New low-priced handsets
• New subscribers
• Accelerating replacement cycle
Source: JP Morgan estimates for mobile handset sales.
9
InfoSonics’ Strategy
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Expand Product Offerings |
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Latin American Expansion |
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Leverage infrastructure to broaden offerings with little incremental cost |
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Build on early success in Latin America and continue to expand in the region |
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Outsourced supply chain services |
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Leverage Big Four Latin American Carriers to expand into other countries |
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Customer base “stickiness” |
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Introduce VK Mobile to currently untapped markets |
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Pursue New Vendor Relationships |
Drive Further Market Penetration |
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Target nimble and innovative vendors that lack a global presence, like VK Mobile, to create new demand |
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US Tier 2 carriers utilize customization to remain competitive |
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Use vendor relationships to break into US Tier 1 carriers |
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as Samsung and Nokia |
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New products and services help increase handset churn |
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Product Offering Expansion
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In-House Services |
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Field Support |
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[LOGO] |
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Product Customization |
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Marketing / Training |
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Remanufacturing |
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Distribution |
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Warranty Services |
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Homologation |
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Technical Assistance |
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Sell Through |
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End User Services |
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Latin American Expansion
[GRAPHIC]
Regional Consolidation
• Consolidation in Latin America has led to four Major Players
• IFO maintains strong relationships with all four Majors
• IFO currently sells only a small percentage of total handsets sold in Latin America, leaving significant growth opportunities
Regional Strategy
• Leverage Big Four carriers to expand into other countries
• Introduce VK Mobile to currently untapped markets
• Eventually penetrate all Latin American countries that make economic sense
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Further Market Penetration In the US
The U.S. RSA Channel taken as a whole represents a significant opportunity in an underserved market…
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Maintain a focus on the RSA Channel |
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Build on current successes |
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Continue to expand relationships |
Note: Estimated U.S. subscribers is approximately 199 million in Q3 ‘05
Source: Wall Street Research and Company documents
…and the major carriers are beginning to show an interest in up and coming, innovative vendors such as VK Mobile
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Use VK Mobile to establish presence with major carriers |
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Continue to source new vendors with unique products |
13
Experienced Management Team
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Name |
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Position |
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Years at |
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Years in |
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Joseph Ram |
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Founder, CEO & President |
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Abraham Rosler |
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Executive VP & Director |
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Joseph Murgo |
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VP, Sales & Marketing |
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Jeffrey Klausner |
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Chief Financial Officer |
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John Althoff |
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President, Latin America |
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14
Financial Highlights
Fourth Quarter 2005 Highlights:
• Revenues increased 79% to $35.0 million
• Operating income from continuing operations up 498%
• Gross margins expanded 220 basis points to 8.9%
• Net income of $0.8 million, or $0.12 per diluted share
2005 Highlights:
• Revenues doubled to $145.8 million
• Operating income from continuing operations up 180%
• Strong gross margins of 8.3%
• Net income of $2.7 million, or $0.44 per diluted share
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Strong Operating Income
[CHART]
Note: Income from Continuing Operations before interest and taxes
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Superior Gross Margins
• Strong gross margins of 8.9% in the 4Q 2005
• Higher margin products and Value-Added Services provide opportunity for margin enhancement
[CHART]
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Strong Balance Sheet
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Cash |
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$ |
7.7 |
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Revolving line of credit (drawn down) |
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$ |
10.0 |
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Long-Term Debt |
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0.0 |
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Equity |
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$ |
18.0 |
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Debt / Equity |
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0.55 |
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Working Capital |
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17.0 |
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Note: As of December 31, 2005
22
Near-Term Focus
• Further penetrate existing customer base
• Both US and Latin America
• VK 2006 lineup; introduce minimum of 3 models
• Open new significant country in Latin America
• Add additional manufacturers
• CDMA (entry level and mid-tier)
• Smart phone (high-end)
• Entry level (GSM and CDMA)
23
[LOGO]
It pays to be well connected
The Premier Wireless Handset and Data
Products Distributor for the Americas
March 15, 2006
Montgomery & Co Technology Conference
Santa Monica, CA
