MGT Capital Investments Inc. (OTCMKTS:MGTI) just announced that it has signed a little intent (LOI) with an entity called Nordic IT that will see the two collaborate on the development of a so-called "truly secure mobile device." This is a company that we keep coming back to, and one that we have been relatively optimistic about in our coverage year to date. This recent development serves to strengthen our bullish bias.Here's why.First, a quick introduction to MGT.This is the cyber security company that John McAfee heads up, and is working to become a cyber security leader in the tech space. It has spent the last year or so on a roller coaster of dips and rallies, rooted in acquisitions, a delisting, exposure to the ups and downs of the bitcoin price, and various degrees of sentiment shifts rooted in the market perception of McAfee himself, which – to put it lightly – is polarized.Our take on the company is as follows:There is some uncertainty in whether it will be able to achieve what it is trying to achieve, but this is a space in which many of the bigger names are slow-moving and antiquated, and have – as the breadth of data breaches, hacks and cyber security concerns hitting mainstream media demonstrates – become, or are quickly becoming, obsolete. They have fallen behind the times, and this opens up a window of opportunity for a more agile (and more technologically relevant) player to secure a portion of future market share.We think MGT could be this player.The company has built a bitcoin mining operation that currently generates bitcoin at one of the fastest rates of any operation of its type in the US (just in the US, mind, there are far more powerful operations in China), and over the last twelve months, has developed or acquired software that secures mobile devices, personal computers and entire networks in a way that the currently available alternatives just aren't able to do.As we noted in our previous coverage, McAfee is currently jumping from conference to conference getting this technology into the sphere of awareness of those individuals that are going to be leading the tech space for the next half century and more.So where does the latest announcement come into play here?Well, MGT's business strategy is to become a sort of an umbrella-entity under which various industry-leading security products sell. Its Sentinel software is an example of one such product. As is the Demonsaw platform for which MGT (finally) just closed a (partial) acquisition. The mobile device that will come about as a product of this latest relationship is another asset that fits under the company's cyber security product umbrella.The plan is to develop it as a modified OME, so basically MGT is going to be buying a bunch of generic android handsets, modifying them to make them secure, and branding them as its own product. Initial estimates suggest demand will be to the tune of 160K units at rollout, and 50K units monthly thereafter, at revenues to MGT of $350 per device. That's a $56 million launch and $17.5 million in monthly recurring revenues.Best not to pay much attention to these numbers – they seem a bit optimistic to us.Some overinflated targets aside, however, this is a strong development as and when it plays out. We're at LOI phase right now, so there's still a ways to go before these things hit shelves (a little over a year if McAfee can hit his own targets), but it's yet another example of things continuing to move forward in a company that many had written off in the wake of its delisting not long ago.We're not saying this isn’t a risky one. It is. Capital structure isn’t great, and as mentioned, McAfee doesn't have the cleanest background, which is always going to impact sentiment. There's also very little in terms of cement numbers that we can use to make projections. As a punt, however, it's a nice exposure. Someone is going to have to fill the gaps that currently render the cyber security space redundant. McAfee's done it before, and there's every chance he can do it again.We will be updating our subscribers as soon as we know more. For the latest updates on MGTI, sign up below!Disclosure: We have no position in MGTI and have not been compensated for this article.
Discover Hidden Gems
Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.
