On the surface, the press release in and of itself may seem benign ... almost innocuous. When you start to proverbially put two and two together, however, this morning's news from View Systems Inc. (OTCBB:VSYM) could actually be early notice that things are about to change for the young, small company. By digging deeper into the details, it becomes clear that VSYM could become in Brazil what TASER International, Inc. (NASDAQ:TASR) and OSI Systems, Inc. (NASDAQ:OSIS) have become in the United States - security icons. View Systems shareholders could be on the same bullish receiving end of things that OSIS and TASR shareholders were on when each of those companies were experiencing a growth spurt a few years back.
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That news: View Systems Inc. will be demonstrating its security hardware (weapons-detection walkthrough scanners, handheld metal detectors, and body-mounted video recorders/transmitters) in Brazil next month, with the help of its partner and distributor there, Armorin LLC.
No big deal? Not so fast. The demonstration will be viewed by government security officials, the Brazilian (statewide) police department, Brazilian bank security officials, and - and this is a biggie - the security team for the upcoming Olympic games. Lining up a demonstration at a police department or for a potential vendor is one thing. That's not what VSYM or Armorin has done, however. Next month's meetings are the equivalent to gaining an audience with the FBI, the NFL, the banking systems VP's, and the Department of Defense in the United States ... an audience the likes of TASER International and OSI Systems would like to have on a fairly regular basis. This could be the beginning of some very significant revenue for the company.
And make no mistake - this is a legitimate opportunity.
For starters, armed robbery is relatively common in Brazil. By ramping up weapons-detection capacity and empowering security and screening officials at key locations, those robberies - and perhaps the unusually high number of murders in Brazil - could be curbed.
There's a more urgent need in Brazil, however, that could drive very near-term revenue for VSYM. In 2014, Brazil will host the World Cup soccer matches, and in 2016, the country will be hosting the Olympic Games. The vulnerability and subsequent security needs of stadium events are clear - walkthrough scanners are an absolute must, and one of those events is right around the corner.
All told, Brazil spends about $30 billion per year on security goods and equipment, importing about $1.5 billion worth of electronic security equipment, and manufacturing another $1.5 billion worth of electronic security goods there. Approximately $250 million worth of those imported electronics security goods come from the United States. Point being, Brazil is clearly willing to spend, and the United States has plenty of room to grow as an importer.
But can View Systems carve out meaningful business in Brazil that the likes of OSI Systems and TASER International, Inc. haven't? In a word, yes.
To give credit where it's due, it was the United States Department of Commerce's International Trade Administration that - in its guide to U.S. exporters published early this year - "To be successful in Brazil, U.S. manufacturers must either be established in the country or have a well-informed local representative. It is also important to have a distributor or systems integrator that can offer after-sales and maintenance services, replacement parts and repairs."
It's spot-on. While TASER and OSI Systems may have modest relationships with vendors in Brazil, View Systems Inc. has a well-established and very effective (clearly) distributor/partner in the country, making contacts and setting appointments that other security equipment manufactures could only dream of. National banks. State police departments. Mass sports venue officials. Government security personnel. That's big, and they all work for organizations with deep pockets. Next year should be a very big one for VSYM, as the seeds to be planted in November start to bear fruit.
For more on View Systems, visit the SCN research page here.
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