CalAmp‘sÂ (NASDAQ: CAMP) stock is flying high right now — up more than 30% so far this year — and last month itÂ released its first-quarter 2018 earnings report, withÂ revenue and earnings per share coming in at the high end of the company’s guidance.Â The machine-to-machine communications company makes equipment that helps track industrial equipment for companies, as well as fleets of vehicles, and owns the LoJack brand of vehicle recovery systems, and right now there’s a lot of expectation that CalAmp can win a large portion of these markets.
There’s a lot of investor optimism right now there, but there are two things that investors might worry about but management wants them to ignore.Â The first is a patent lawsuit CalAmp is involved in, which cost the company $6.1 million in the first quarter and severely brought down the company’s earnings. The second is the remote possibility that the government could pass legislation that would delay a trucking mandate that’s expected to be a boon to CalAmp’s business.
Management thinks patent infringement is a nothingburger
CalAmp reported a net loss of $2.7 million in its first-quarter fiscal 2018, which was mainly the result of $6.1 million patent infringement judgement that the company recorded in the quarter, which increased CalAmp’s General and Administrative (G&A) expenses. The 2013 lawsuit alleges that CalAmp is infringing on patents by a non-practicing company called Omega Patents. And while the lawsuit clearly impacted CalAmp in the quarter, management said that CalAmp is continually fighting the suit and that it hasn’t infringed on any patents.
CalAmp CFO, Richard Vitelle, said on the call last month that, “Notwithstanding this litigation accrual booked in the first quarter, we…