Buyout Bait Tech Stocks: Control4 (CTRL)
The home automation market has been around for a long time, but so far, it has remained mostly niche. However, some think the industry is primed to go mainstream soon following Google’s recent $3.2 billion acquisition for Nest Labs, the developer of the popular Nest Learning Thermostat.
One of the beneficiaries of a blowup in this space would be Control4 (CTRL), which develops a full-blown operating system for home automation, managing functions like temperature, lighting and security, and it also hooks into smartphones and tablets. CTRL sells its technology on a subscription basis.
Control4 would at least be attractive given not only its future opportunity, but also its proven growth. Last year, CTRL grew revenues by 17% to $128.5 million, and non-GAAP net income came to $8.4 million, or 38 cents per share, which was a 72% improvement. And at less than $500 million in market cap, Control4 would hardly break the bank.
Then who might buy CTRL? Potential suitors include tech stocks Microsoft and Cisco (CSCO), which both have designs on home automation. But you could even see interest from telecom or cable operators like AT&T (T), Verizon (VZ) and Comcast (CMCSA), who would love to be more entrenched in the living room.