Taser International, the Scottsdale-based maker of stun guns, is settling a series of shareholder and derivative lawsuits for $21 million, and Tim Beyers, writing for the Motley Fool, thinks that it's a steal. Even though the $21 million is more than the last quarter's revenue of $16 million, the company expects to pay only $7.9 million. The other $13 million will be covered by insurance proceeds and company stock. The company believes the shareholder lawsuits would have taken up too much of top management's time. Rick Smith, CEO of Taser said "we look forward to putting these issues behind us and moving ahead with the next phase of TASER's business strategy. We have generated significant momentum in our operating results as of late." Beyers agrees with Taser. He notes that Taser has generated $6.1 million in cash flow for the first two quarters, with $4.1 million of it coming in the last quarter. The company is already sitting on $20 million in cash and short term investments.

Beyers sees signs that Taser's business is picking up from sales to police departments and a growing niche of sales to the military. The second quarter sales of $16.2 million beat the analyst's expectations and the net margins increased to 9.5%. The earnings per share figures were less than expected at 2 cents (versus 3 cents). Taser says that a majority of the difference was a rise in administrative costs, a good portion from legal expenses. Although Taser has settled the stockholder and derivative lawsuits, it still has close to 49 product liability cases involving wrongful death or training injuries reported in its 10K. The company plans to fight each case and isn't too concerned. They reportedly have seen a lot of the cases dismissed. Taser is a company that doesn't mind a fight. It is a tough business, but it is one with gross margins consistently over 60% and no real competitors and that's worth fighting for.

John Laub is the Chairman of the CEO-CFO Group.

1. "Taser settles suits for $20 mil." Dawn Gilbertson. The Arizona Republic
Aug. 12, 2006.

2. "TASER Tames Legal Tussles." Tim Beyers (TMF Mile High). August 10, 2006

3. "TASER Tells All: Fool by Numbers." Tim Beyers (TMF Mile High). Motley Fool.com. July 26, 2006

4. TASER International Reaches Agreements to Settle Securities Class Action and Derivative Litigation. Company press release. August 9, 2006.

5. TASER. 10 K. December 31, 2005.

6. TASER 10 Q. June 30, 2006.