The Good and the ZAGG

In this age of smartphones, tablets, and iPads, we look for top-of-the-line scratchguards and covers to best protect our precious handheld devices. In this niche market, handheld device accessory specialist ZAGG (NAS: ZAGG) has carved out its own little space.

In its most recent quarter, ZAGG nearly doubled revenues and is quite bullish about the future. Before diving into the numbers, let's take a closer look at the growing smartphone market, which indirectly translates into revenues for ZAGG.

The good
The good thing for companies such as ZAGG is the growing popularity of smartphones. The smartphone market has grown by leaps and bounds since the launch of Google's (NAS: GOOG) immensely popular Android OS, and, of course, the big daddy of smartphones -- Apple's (NAS: AAPL) ever-innovative iPhone. A recent survey by the NPD Group shows that Apple's iPhone 4 and iPhone 3GS dominated all other phones in the third quarter this year. Smartphones now comprise 59% of the entire mobile-phone market, which is a 13-percentage-point rise from a year ago. Thus, as more and more smartphones hit the market, ZAGG can hope that more of its accessories, such as its flagship product the invisibleSHIELD, get sold.

The company, which began selling invisibleSHIELD in 2005, has come a long way since its inception and is growing at quite a rapid pace. Last year, ZAGG almost doubled revenues to $45.9 million from $23.1 million in the same period the previous year. This was the first time in the company's short history that revenues crossed the $40 million mark.

Revenues shot up thanks to last quarter's acquisition of fellow accessory maker iFrogz, higher product prices, and an increase in stock-keeping units (SKUs) as customers house more ZAGG swag. As of last year, ZAGG's largest customer was Best Buy (NYS: BBY) , which formed nearly 41% of its net sales. And the iFrogz buy has helped ZAGG expand its product portfolio.

ZAGG has also added a host of new products to its portfolio to cater to the growing tab and smartphone market. It introduced the ZAGGfolio keyboard case designed for Apple's iPad 2 as well as Samsung's Galaxy Tab. And it has also launched a new Bluetooth keyboard, christened the ZAGGkeys FLEX, for Apple and Android devices.

The Foolish takeaway
ZAGG has a lot to look forward to as smartphones, tablets, and e-readers become more ubiquitous. And with the holiday season ahead, we can expect more sales of tablets, smartphones, and iPads, which can help translate into sales for ZAGG. A diverse product portfolio and increasing sales channels place ZAGG well in the run to the end of the year. What say you? Leave your comments below and also follow ZAGG throughout the Christmas season by adding it to My Watchlist.

At the time thisarticle was published Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above. The Motley Fool owns shares of Google, Apple, and Best Buy.Motley Fool newsletter serviceshave recommended buying shares of Google and Apple, creating a bull call spread position in Apple, and writing covered calls in Best Buy.Motley Fool newsletter servicesformerly recommended. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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