Small Cap Stocks

Blog

Archive for August, 2006

Stratos (STLW) Update

August 21st, 2006 by Envoy Global Research | No Comments

STLW investors should listen to Stratos’s latest earnings conference call, which can be accessed by clicking here.

The call provides a good summary of why we think the stock has low risk at current prices, and significant potential upside should the company report positive earnings sometime over the next 12 months. (Note: The company is already profitable on a cash-flow basis, as can been seen from the recent 10-K).

Notably, the company’s backlog, as of April 2006, was up 20% year-over-year, to $13.7 million. This is the highest backlog in quite some time. In addition, management provided an update on various real estate holdings, which they are in the process of selling. It appears that Steel Partners, who has already offered $7.50 per share for STLW, is pressing management to get a move on with these real estate sales, which could bring in a decent amount of cash to STLW.

STLW reports fiscal first quarter earnings later this month. We’ll be looking for signs of top-line growth, continued cash generation, and progress on various shareholder-value initiatives, including any recent share buybacks given the dip in the stock price.

Please Note: We first recommended STLW at $6.80, and still hold a position in the
stock. All ideas, opinions, and/or forecasts, expressed or implied
herein, are for informational purposes only and should not be construed
as a recommendation to invest, trade, and/or speculate in the markets.
Any investments, trades, and/or speculations made in light of the
ideas, opinions, and/or forecasts, expressed or implied herein, are
committed at your own risk, financial or otherwise.

ActivIdentity (ACTI) Update

August 17th, 2006 by Envoy Global Research | No Comments

We just had a chance to listen to ActivIdentity´s latest conference call. All in all, we are impressed with the company´s focus on minimizing cash burn, and driving the business to profitability via continued costs cuts and new revenue generating initiatives. Management is forecasting decent revenue growth next quarter and expects to reach cash-flow positive by early next year. The company seemingly has excellent opportunities in the government sector as Federal Government departments and agencies look to achieve HSPD-12 compliance later this year.

If ActivIdentity can execute on its revenue growth and cost-cutting initatives, the company will, as per management´s guidance, turn a profit in 2007. We think, as noted in the past, that if these forecasts prove accurate, that the stock can trade at 2.5X to 3X revenue, a still substantial discount to the valuation accorded to RSA (a competitor to ACTI) in the recent EMC acquisition. Assuming a $60 million revenue run rate in 2007, and $135 million in cash (no debt), that implies a price target for ACTI of between $6.25 and and $7 per share over the next 12 months.

Please Note: We first recommended ActivIdentity (ACTI) at $4.37, and still hold a position in the
stock. All ideas, opinions, and/or forecasts, expressed or implied
herein, are for informational purposes only and should not be construed
as a recommendation to invest, trade, and/or speculate in the markets.
Any investments, trades, and/or speculations made in light of the
ideas, opinions, and/or forecasts, expressed or implied herein, are
committed at your own risk, financial or otherwise.

Network Engines (NENG) Update

August 14th, 2006 by Envoy Global Research | No Comments

For interested investors in NENG, who might be worried about the company´s reliance on Microsoft security products, we think the following articles, regarding Microsoft´s acquisition of Whale Communications and the expected release of ISA 2006, will be of interest.

Click Here for a press release from Microsoft.

Click Here for an article from InfoWorld.

Click Here for an additional release issued upon the completion of the Whale Purchase.

Click Here to learn about ISA Server 2006, a key component of the NENG Investment Thesis.

Some things to think about: Will NENG make the appliances based on Whale´s software? Don´t some of the statements in the last press release from Microsoft sound very similar to the planned managed branch offering of Getronics and NENG?

And a final quote from Microsoft: "We are also working with our OEM partners to release an updated Whale
and Microsoft ISA Server 2006 appliance, which we plan to bring to
market in early 2007. At the same time, we will be integrating Whale
technologies into the next release of ISA Server itself (after ISA
Server 2006), with the intent to release shortly after Windows Server
codename “Longhorn.” This new release will fall under the new Microsoft
Forefront brand of security and secure-access solutions."

IIP: Notes from the 10Q

August 9th, 2006 by Envoy Global Research | No Comments

What follows is brief summary of my thoughts on IIP, after reading thru the company´s recently filed 10Q.

NENG: Notes from the 10Q

August 9th, 2006 by Envoy Global Research | No Comments

This post summarizes some facts from Network Engine´s (NENG) most recent 10Q for the quarter ended June 30, 2006.

Network Engines Making Progress

August 4th, 2006 by Envoy Global Research | No Comments

Network Engines (NENG) remains the biggest loser among our stock picks this year, but after finally listening to the company’s latest earnings conference call, I remain bullish on the stock and believe that the shares still offer an attractive risk/reward ratio at current prices.