Saturday, December 13, 2003

Taser stock on the rise

Boosted by technology

By John Byczkowski
The Cincinnati Enquirer

Though Cincinnati police haven't bought Tasers yet, investors should have.

Taser International Inc. of Scottsdale, Ariz., makers of the devices for police and the military, has seen its stock price rise more than 2,200 percent this year, from $3.70 a share in February to a close Friday of $87.45.

The city of Cincinnati has said it would spend up to $1 million to buy more than 1,000 of the company's X26 Tasers, which sell for $799. Last week the city was notified that the U.S. Department of Justice may give up to $740,000 toward that purchase.

Sales at the company will more than double this year to about $23 million. Chairman Phil Smith said the company sold about 12,000 Tasers during all of 2002, but "this quarter we'll do more than we did all of last year."

The reason for the rise in sales is a new, more effective technology. A Taser shoots two hooks at a subject, then delivers an electrical charge. In older models, the purpose was simply to inflict pain, to drive the subject into submission.

But that only worked about half the time, Smith said. Stronger subjects, or those on drugs, could often fight through the pain. Plus, the guns were big, so few officers carried them. The new guns deliver a different kind of charge, one that resembles brain waves, which go right to the nervous system, Smith said. This charge drops nearly all subjects to their knees.

Police in Phoenix and Orange County, Fla., report the Tasers save taxpayers money by reducing injuries to police and subjects.

"If you talk to most cops, they would tell you this is the first thing in 25 years that really does what it's supposed to do. It protects them from getting hurt, because they don't have to hand-to-hand fight with anyone or spray (Mace) and spray on themselves," Smith said.

The Taser guns also have red laser aiming devices, high-intensity flashlights and a computer chip that records each use. Smith said 40 percent of the time the gun is drawn, the subject capitulates when the red laser hits him.

Of those subjects hit with the Taser, 94 percent are incapacitated, Smith said. Most of the failures are because of missed shots or thick clothing. The guns that Cincinnati will buy are equipped with heavier hooks that will better penetrate thick clothing, he said.

In addition, the company's new X26 model - introduced in May - is small enough to be carried on officers' belts.

Taser International is adding 250 police departments a month to its roster of clients. The U.S. military is using Tasers in Iraq, Smith said, and the guns are being tested in the United Kingdom, for possible police deployment.

Dick Ryan, a stock analyst who follows the company for Feltl & Co. in Minneapolis, said he expects Taser's sales and profits to triple by 2005. If military sales rise and more international orders come in, "my numbers could be conservative," he said. Ryan rates the stock "hold."

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