I’ve been following Network Engines (NENG, current price: $1.30) for several years already, and so far, the stock has been a major disappointment. However, it never pays to lose hope, especially with companies that have no debt. It’s always possible that good luck is right around the corner.

So perhaps, NENG’s turn will come in 2010. I’m bullish (yet again), because the combination of a new Dell DC powered server design win and another new $10 million per quarter client, should help drive revenues higher for NENG in 2010.

The problem with NENG, of course, has always been the company’s razor thin gross margins, a situation I don’t see changing much, despite the new customers. However, since the company has done a good job keeping operating costs under control, I suspect that despite the low gross margins, the new revenues will translate into a significant improvement in profitability in 2010. In other words, the company should have some degree of operating leverage, at least in terms of marketing and G&A.

The improving top and bottom line, should attract more investors into the stock, who stock price remains at 2005 levels.

Disclosure: Affiliates of Envoy Global Research, and its principals, own shares in NENG. 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.