Australian eye-tracking technology company Seeing Machines Limited (LSE: SEE) climbed more than 10% this morning, after the company announced a new memorandum of understanding with Samsung Electro-Mechanics Corporation (SEMCo).
Its the second new strategic partnership this month for Seeing Machines, following news of a 15-year agreement with a subsidiary of Takata Corporation a company that makes automotive safety systems earlier this month.
Why does it matter?
Seeing Machines biggest customer to date, Caterpillar, is making very successful use of the firms eye-tracking technology in its large mining machines, where driver fatigue is a real problem and the human and financial costs of a moments drowsiness can be massive.
The firms deal with Takata is a logical extension of this, as many road accidents are also caused by tiredness.
However, todays deal with Samsung opens up a whole new potential market to Seeing Machines: the consumer electronics industry is massive, and eye-tracking is likely to be one of the key elements of next-generation user interfaces.
Is Seeing Machines a buy?
Seeing Machines isnt the kind of investment wed normally discuss in-depthhere at the Motley Fool its a loss-making, early-stage technology company.
However, theres an exception to every rule, and I believe that Seeing Machines is worth serious consideration for growth investors with a longish horizon.
1. World-class partners
Im not a world-class expert on Seeing Machines technology, but some of the worlds leading industrial names such as Caterpillar and Samsung are experts, and are seriously enthusiastic about Seeing Machines.
2. Use your imagination
The potential market for driver fatigue monitoring systems alone is huge.
Its not hard to imagine this kind of technology being standard fitment in all new cars, trains, buses, lorries, aeroplanes and industrial plant, 10-15 years from now.
I suspect that the cost of the new technology would largely pay for itself in terms of accident reduction.
3. Cash in hand
Although Seeing Machines is currently loss-making, the firm has 15m of cash on hand equivalent to a quarter of its market cap and revenues are expected to double in 2015.
In my view, the technology is highly commercial, and Seeing Machines is a sector leader so at some point, profits or a takeover deal are likely to follow the firms rising revenues.
Seeing Machines isnt dirt cheap at todays 7.6p share price, and its possible that the market will provide better buying opportunities in the weeks and months ahead.
I think that as a long-term buy, today’s price is fairly reasonable — but ultimately, it’s your decision.
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Roland does not own shares in any of the companies mentioned.