Zagg (ZAGG $5.15) revealed that third quarter results were stronger than predicted. Sales jumped 127% to $22 million, fueled by strong attach rates to the Apple iPad and a broadening range of smartphone devices. New distribution channels contributed further momentum. The company declined to comment on September quarter earnings. We are not aware of any reason why margins would have narrowed, however, on the surge in volume. Assuming they remained level with the June period income probably finished in the range of $.12-$.14 a share. Performance might dip a little from there in the fourth quarter. Zagg makes a significant amount of shipments in the third period to fill the pipeline for Christmas. But reorders tend to be substantial as the season unfolds.
December period income likely will be close to the third quarter level, and perhaps ahead of it. We are raising our full year earnings estimate to $.35 a share, up 106%, on sales of $65 million (+70%). In 2011 revenues and earnings could realize $80-$90 million and $.45-$.55 a share, respectively. Essentially, those previously were our 2-3 year targets. It's premature to revise the long term picture too much. Zagg simply may have enjoyed an unusually good quarter. A significant upward revision is likely, though, if Zagg's financial performance keeps up the fast pace into the coming year.