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Hello Readers,
Since the last Newsletter, we have closed another position, for a great gain. Also, by the time you read this, we should have closed QuickLogic, which has reached our 50% threshold.
ALTAIR NANOTECHNOLOGIES (6/20/04). Closed position 2/10/05 at $4.72 for a 105% GAIN.
On Thursday, 2/10, Altair more than doubled on news that it had achieved a breakthrough in Lithium Ion battery electrode materials, which will allow rechargeable batteries to have three times the power of existing ones, says the company. Sure ALTI could climb higher, but we’re very happy with the 105% gain, which is one of our biggest in a while.
February has turned into the anti-January. Last month, the markets crashed and burned, but, so far, this month the averages have made some very nice comebacks. This is particularly true for small stocks and the Russell 2000 appears poised to test its all-time high that was set just a few months ago.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
Arotech (ARTX) (6/5/01). Armor division receives new orders to deliver ballistic vests and armor kits for fixed and rotary aviation equipment. Awarded London bus simulator contract. At some point, ARTX should stop floating new stock and give itself some breathing room.
ViroLogic (VLGC) (7/20/01). To release year-end numbers on February 22. VLGC assays used to characterize and identify potential treatments for virulent multi-drug resistant strain of HIV. Announces new three-year service pact with GlaxoSmithKline to support new HIV drug discovery and development efforts.
Generex (GNBT) (8/5/02). Working on vaccine development against bioterror agents. Granted U.S. pantent for Buccal delivery of pain relief medications. Reports preliminary results of a Phase 2b clinical study of Oral-Lyn. This one’s on the “Endangered List”.
Art Technology (ARTG) (8/5/03). Launches new version of web self-service offering, integrating Primus Search solution. Year-end results has some positives; balance sheet still looking pretty fair.
Targeted Genetics(TGEN) (10/5/03). TGEN, IAVI, and collaborators expand Phase 1 clinical trail program of HIV/AIDS vaccine program to India.
Trio-Tech (TRT) (10/20/03). Post 2nd quarter loss on deferred payment, but sees 3rd QT profit; balance sheet still holding up okay.
V.I. Technologies (VITX) (11/20/03). VITX and Panacos slate merger vote for March 10. This, too, is on the “Endangered List”.
Active Power (ACPW) (11/20/03). Closes $20 million private placement of common stock. Hires new CFO.
Actuate (ACTU) (1/5/04). Distributes fiscal accountability across the Enterprise. Year-end numbers a little better than a year ago; balance sheet looks healthy.
Crossroads Systems (CRDS) (2/5/04). Announces new data mover appliance for SAN backup solutions. Byte and Switch Insider unmasks SAN routing.
Somera Communications (SMRA) (2/20/04). Although revenue drops year-over-year, losses are pared by over 50%; balance sheet appears to be in good shape. New Star analysts rankings.
Open TV (OPTV) (3/20/04). OPTV and Australia’s Channel Nine sign license accord for OPTV Headend Solutions. Builds first interactive television shopping application for Dish Network and Sharper Image.
Socket Communications (SCKT) (3/20/04). Introduces world’s first V.92 SDIO 56K Modem for pocket PCs. Schedules earnings call for February 23.
NexMed (NEXM) (4/5/04). Initiates enrollment in the U.S. Phase 1 clinical study of NM10060 – a topical treatment for Onychomycosis.
Palatin Technologies (PTN) (4/5/04). Posts good female sex drug data. Recent balance sheet looks healthy.
Management Network (TMNG) (4/20/04). Year-end numbers look okay and so does the balance sheet.
Glenayre (GEMS) (5/5/04). MTN awards GEMS contracts for South Africa totaling over $7 million. To introduce VerseraVideo Mail at 3GSM World Congress 2005. Sets earnings call for March 10.
GoRemote (GRIC) (5/5/04). Launches revolution exchange program. CSL joins with GRIC to provide 3G and Wi-Fi roaming services. Announces world’s largest secure wireless network. Mile-High Wi-Fi gains altitude through connexion by Boeing and GoRemote alliance.
EMCORE (EMKR) (5/20/04). Announces new small form factor 10GbE LX4 module. Stock upgraded by Needham & Co. Introduces extended reach XENPAK module. Quarterly report pretty upbeat and balance sheet still looks pretty good.
GlowPoint (GLOW) (5/20/04). Company and Pixion announce availability of video meeting companion web collaboration service. Kicks off Australian partnership.
Network Engines (NENG) (6/5/04). Announces two new security appliances. Cascade Die Casting Group switches to NENG’s NS6300 security appliance.
Bindview (BVEW) (6/5/04). Highlights COBIT implementation practices for IT security compliance. Issues RapidFire updates. Announces participation in Oracle PartnerNetwork program. Extends IT security and compliance to Oracle databases. Releases year-end numbers which are a slight improvement over FY2003; balance sheet still looks good. Predicts $84 million in revenues and 15 cents EPS for FY2005.
Genus (GGNS) (7/5/04). Schedules shareholder meeting on March 10 to vote on AIXTRON merger.
Avanex (AVNX) (7/20/04). AmTech Research initiates coverage on AVNX.
Tripath (TRPH) (8/5/04). TRPH’s Class-T amplifiers chosen by Virgin Electronics to drive Boomtube EX.
Chordiant (CHRD) (9/20/04). Showcases new process-driven applications. Launches new suite of applications to optimize customer interactions. Unveils new decision management suite. Delays quarterly filing; does not expect to meet guidance.
Trikon (TRKN) (10/5/04). Year-end numbers show pretty good revenue growth and nice paring of losses; balance sheet still looks fairly good.
Nova Measuring (NVMI) (11/5/04). Sets earnings release for February 17.
Net2Phone (NTOP) (11/5/04). Northland Cable TV launches digital phone service with NTOP. Huges Network Systems Europe and NTOP announce VoIP via satellite service.
Zphone Technologies (ZHNE) (12/5/04). Introduces GigaMux 50 optical access platform for service provider optical edge applications.
Advancis (AVNC) (12/20/04). Stock was moving nicely until it posted weak 4th QT sales and warned of a soft 2005.
QuickLogic (QUIK) (12/20/04). Year-end revenues up 6% over FY2003. As we said above, we will be closing this one very soon.
InsWeb (INSW) (1/20/05). Receives letter of inquiry from CA Dept. of Insurance.
Xcyte Therapies (XCYT) (1/20/05). Presents results of two clinical trials of Xcellerated T cells. Withdraws FDA protocol for leukemia trial, which may result in a delay of the initiation of the trial beyond the 2nd quarter.
Savient Pharmaceuticals (SVNT) (2/5/05). SVNT and Teva launch TEV-TROPIN for pediatric growth hormone deficiency. Announces partial settlement of human growth hormone intellectual property disputes with Novo Nordisk.
Three-Five Systems (TFS) (2/5/05). Selected as color display supplier for a tier 1 handset maker. Fourth quarter loss widens, misses analysts views; balance sheet still seems okay.
Our selections for this issue are another semiconductor and a software company, both trading on NASDAQ.
MINDSPEED TECHNOLOGIES, INC. (NASDAQ: MSPD) – $2.60. Twelve-month hi-low has been $10.88 – $1.81. Located in Newport Beach, CA, with about 600 employees, this semiconductor has 100.7 million shares outstanding, $107.5 million in total current assets, $139.3 million in total assets, and $76.4 million in total liabilities, of which $44 million is convertible notes. Institutional ownership is around 53%. Three analysts rate the stock a “strong buy” and two as a “moderate buy”. http://www.mindspeed.com
We keep thinking that the inventory buildup in semiconductors is being whittled more quickly than what has been theorized, and, as a result, the industry should soon rebound. And so, we add Mindspeed Technologies, Inc. to the Current Portfolio.
Prior to June, 2003, Mindspeed was a segment of Conexant Systems, which spun off MSPD at that time. Trading on NASDAQ for around 18 months, Mindspeed designs, develops, and sells semiconductor networking solutions for communications in enterprise, access, metropolitan, and wire area networks. The company’s four key product families include high-performance analog transmission and switching solutions, multiservice access products designed to support voice and data services across wireline and wireless networks, T/E carrier physical-layer and link-layer devices, and ATM/MPLS network processors. MSPD’s products are used in a wide assortment of network infrastructure equipment, including voice and media gateways, high-speed routers, switches, access multiplexers, cross-connect systems, add-drop multiplexes, and digital loop carrier equipment.
Service providers and enterprises use Mindspeed’s equipment for the processing, transmission and switching of high-speed voice and data traffic, including advanced services, such as voice-over-Internet protocol (VoIP), within different segments of the communications network.
Customers include Alcatel, Cisco Systems, Huawei Technologies, Nortel, and Siemens. In December, Mindspeed extended its DS3/E3 line-on-a-chip family with one-and two-port devices. It also closed on a $46 million convertible senior notes offering. In January, the company said to expect current quarter revenues to be flat to up 5% sequentially, which, of course, has kept the stock down. However, MSPD plans to reduce its quarterly operating loss by nearly 13% and to further reduce its cash burn.
For FY2004, ending 9/30/04, revenues were $119.43 million with $93.25 million in losses. During the 1stQT of FY05, ending 12/31/04, revenue was $26.3 million with $12.3 million in losses.
The semiconductor industry is currently in a “work down” phase. As inventory is pared, capital spending usually picks up and that should boost Mindspeed.
Our 20-month target for the stock is $4.25 to $4.75.
For more information, contact MSPD’s Thomas Stites at 949-579-3650.
CENTRA SOFTWARE, INC. (NASDAQ: CTRA) – $2.30. Twelve-month hi-low has been $4.69 – $1.33. Headquartered in Lexington, MA, with about 250 employees, this software company has 27.6 million shares outstanding, $37.7 million in total current assets, $46 million in total assets, little debt, and $21.7 million in total liabilities. Institutional ownership is around 37%. http://www.centra.com
Time again for another small tech that has a pretty good balance sheet. Also, Centra Software, Inc. has had pretty fair sequential revenue growth over the last year. Founded in 1995, and trading on NASDAQ for five years, Centra provides specialized software and services for real-time communication, collaboration, and learning over the Web. The company’s products are designed to help customers accelerate product introductions, deliver hands-on deployment of software applications, effect change-management initiatives, expand training and certification to employees and external channel partners, facilitate customer interaction and online selling, and support project management activities. Centra’s products provide access to users through firewalls and proxy servers, and deliver both half and full-duplex VoIP audio, live multi-point video, fully interactive application sharing, and record and playback applications. Since inception, CTRA has provided software and services to more than 3.2 million people in over 1200 organizations.
Centra 7, released in June, 2003, is the company’s enterprise-class application software and addresses a range of solutions such as Centra 7 for Virtual Classes, Centra 7 for Web Seminars, Centra 7 for Self-service Meetings, Centra Knowledge Center, and Centra Knowledge composers. The product is available in 13 languages including traditional and simplified Chinese, Danish, French, German, Italian, Spanish, and English.
During the last quarter of FY 2004, Centra added 42 new customers, including The University of Kentucky, Morgan Stanley, the Marine Corps, Food Lion, and Samsung. CTRA also signed nine Enterprise Advantage Subscription (EAS) contracts with a total value 71% greater than EAS contracts signed in the previous quarter. In December, Siebel Systems selected the company to provide collaborative learning capabilities to their customers, partners, and employees.
For FY2004, ending 12/31/04, revenue was $38 million with $11.1 million in losses compared to FY2003 revenue of $43 million and $7.9 million in losses. However, since the 1stQT of FY2004, revenue has grown sequentially every quarter, and CTRA is expecting revenue growth for 2005 to be 10% to 20% over 2004.
Centra is one of those beaten up small tech stocks that appears to be blooming, again.
Our 20-month target for the stock is $4.50 to $5.00.
For more information, contact CTRA’s Kristine Mozes at 781-869-4162; kmozes@centra.com
Look for the March 5, 2005 Newsletter to be posted on 3/1 or 3/2.
Thank you,
George