Our 2011 earnings and sales estimates are unchanged. We think sales will finish around $30 million to yield non-GAAP earnings (fully taxed) of $.30 a share. The new software promises to drive margins higher in the second half of the year. Hardware demand is likely to stay robust, moreover, fueled by the ongoing boom in mobile devices and other consumer electronics. In 2012 fully taxed earnings could achieve $.50 a share on sales of $35 million as Data I/O enjoys the benefits of a full year of software sales along with a levelling off in R&D expense. Cash totals $19.0 million ($2.11 a share). Those funds could be invested in acquisitions of complementary products and services. Downside risk exists. The semiconductor industry is cyclical and Data I/O would be exposed to a severe decline. But the company already controls a leading share of the market and that figure could expand in the future as device complexity keeps increasing, forcing low-end Chinese competitors to either keep pace technologically or abandon the business.
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