Niche markets. Not an easy place to make money in, but if you can carve out a unique business model and stay ahead of others, revenues can become pretty substantial. Scotty Group is a niche player in two areas: mobile satellite communications and telehealth. Both markets are focused on the military and government/health care sectors.
Scotty Group as it stands today is the creation of a merger between Motion Media PLC and Scotty Tele-Transport Corporation in 2004. Since the merger occurred, the company has restructured itself and refocused on the two core competencies of mobile communications and telehealth.
The restructuring took up most of managements time in 2004/ early 2005, but now the company is streamlined and back to concentrating on generating contracts that will hopefully move the company towards cash flow and positive earnings per share.
Scotty?s Telehealth business offers a suite of products (aptly named Care Station) that create an interactive in-home monitoring and patient care system. Products include videophones, software and set top units that can remotely monitor patients with a variety of illnesses. The obvious advantage from a hospitals point of view is the ability to monitor patients remotely at the hospital thereby reducing the demand on nurse workloads and furthermore reducing the number of hospital beds filled with patients whose state requires monitoring but not 24 hour care. The Care Station also fills other basic requirements like monitoring blood pressure and pulses, and allows patients to maintain contact with their doctors or nurses via videophone. Scotty has already signed some contracts to install Care Station, including a contract in the United States with the US Veterans? Association. Scotty are confident of announcing a similar deal in India in the first quarter of 2006.
Scotty also supplies telephony equipment which includes a licensing agreement with Porsche Design Group, a subsidiary of German Automaker Porsche AG. Scotty is currently moving the telephony equipment division into a wholly separate subsidiary of the parent company so as to allow it to focus on the video telephony niche market without having to share managements limited time with the two primary divisions.
Scotty?s third and by far most revenue generative division is mobile satellite communications. The equipment is targeted for military, search and rescue and disaster control situations. The company has offices in Asia, Europe and North America and currently has a variety of ongoing trials with military and related services around the globe. Today Scotty announced it had won a contract to supply up to 20 mobile satellite communication systems as part of an ongoing upgrade of the CH53 helicopter fleet for the German military. The upgrade is being carried out by Eurocopter, which Scotty are a preferred supplier. The deal is worth $7.5 million to Scotty and is a serious boost to its attempt to roll out its helicopter satellite communications system to a wider audience. Eurocopter currently builds around 400 helicopters a year and also has a number of contracts to upgrade older models. Scotty is hoping to capitalise on its preferred supplier status with Eurocopter to greatly increase sales. Eurocopter stated today that it expected Scotty?s equipment to be used in other types of helicopters and for many other customers ? a big boost for the niche market player.
Scotty further added today that orders in the Telecare sector for 2006 already amounted to US $3 million. Probably the most interesting contract the Telecare division has signed is with the German Navy which the company has accredited to its ability to cross market its products.
Shares in Scotty rose more than 50% over two days in reaction to the Eurocopter contract win.