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Hello Readers,
Since the last Newsletter, we were able to close five positions; four for some nice gains and one for a loss.
IONA TECHNOLOGIES (8/5/04). Closed position 10/14/04 at $4.82 for a 53% GAIN.
CONVERA (9/5/04). Closed position 10/5/04 at $4.20 for a 60% GAIN.
GIGAMEDIA (7/20/04). Closed position 10/5/04 at $1.55 for a 55% GAIN.
GENETRONICS (10/5/00). Closed position 10/5/04 at $2.87 for a 55% LOSS. (price reflects 1 for 4 reverse stock split).
ZI CORPORATION (6/20/04). Closed position 10/1/04 at $3.45 for a 57% GAIN.
Back around the end of August, IONA had pierced our 50% threshold and we thought the stock would go higher, but it drifted back down. This time, the stock made a return to its August levels on good earnings news, and, in this stumpy market, we took the 53% gain. Since we pick it last month, Convera had had a steady rise and the 60% gain looked ripe. GigaMedia had been steadily climbing for about a month, then broke through our 50% comfort zone. A few issues ago, we placed Genetronics on the “Endangered List”, and thought now was the time to take the loss, after four years of hand-wringing. As promised in the last Newsletter, we closed ZIGA for a decent gain; on the day we posted the October 5 issue, the company was named one of Canada’s fastest growing technologies companies by Deloitte.
Now, as for the markets, well, the election is nearly here and maybe, soon, we’ll get a better feel as to the market’s direction. However, if crude oil keeps soaring, it won’t matter who wins.
Here are the headlines since the last Newsletter about companies in the Current Portfolio. Dates in parentheses are when we first recommended them.
CE Franklin (CFK) (5/5/01). Provides transaction update about Wilson International acquisition.
Arotech (ARTX) (6/5/01). Battery Division receives CECOM military battery contract while Simulation Division receives $6 million in new orders.
VASCO Security (VDSI) (2/5/02). Will release quarterly numbers on 10/21. Greek bank Egnatia to use Digipass for retail banking. Hosts its first worldwide banking summit.
Art Technology (ARTG) (8/5/03). About half a dozen releases on proposed merger with Primus Knowledge. Introduces a new generation e-marketing application to fully integrate inbound web interactions with outbound e-mail. Earnings call slated for 10/21. Raises 3rd QT sales outlook.
Targeted Genetics (TGEN) (10/5/03). Deloitte names company to its list of Washington State’s fastest growing technology companies.
V.I. Technologies (VITX) (11/20/03). Reschedules special shareholders meeting and other releases. Remember, this one is on the “Endangered List”.
Active Power (ACPW) (11/20/03). Receives order for first parallel multi-megawatt UPS system. Plans earnings call for 10/27.
AVANT Immuno (AVAN) (12/5/03). To announce 3rd QT results 10/21.
Actuate (ACTU) (1/5/04). Renews strategic OEM pact with Callidus Software. Stock takes a tumble on a surprising quarterly loss and company launches cost cutting plan. JMP Securities downgrades stock. Achieves “Powered by SAP NetWeaver” certification. Singapore newspaper publisher deploys ACTU software.
Somera (SMRA) (2/20/04). Earnings call scheduled for 11/12.
Oplink (OPLK) (2/20/04). To report 1st QT 2005 earnings on 10/28.
OpenTV (OPTV) (3/20/04). Extends license agreement with AUSTAR.
Socket Communications (SCKT) (3/20/04). Earnings call scheduled for 10/20. Delivers take-anywhere, go-anywhere portable power source for users on the go. Showcases bar code scanners integrated with Siebel mobile business applications.
GoRemote (GRIC) (5/5/04). Engages new independent auditor. Stock upgraded by Needham & Co.
GlowPoint (GLOW) (5/20/04). Introduces Video Call Director. U.S. DOJ extends use of GLOW’s video services. Avivon becomes exclusive Glowpoint reseller. Announces strong annual growth in 3rd QT. Adds wealth management firm to its customer roster.
Network Engines (NENG) (6/5/04). Sees softer 4th QT revenue. Will exit component resale market. Announces availability of the NS series firewall appliances.
BindView (BVEW) (6/5/04). RAZOR team issues RapidFire updates for new RPC, SMTP Microsoft vulnerabilities. Revises 3rd QT estimates but reaffirms full-year estimates.
Altair Nanotech (ALTI) (6/20/04). Stock gets a nice bump with European patent award notification.
Gensus (GGNS) (7/5/04). Aixtron shareholders approve capital to buy Genus.
Avanex (AVNX) (7/20/04). Earnings releases slated for 11/1.
Vitria (VITR) (9/5/04). Earnings call set for 10/27. Selected by XO Communications to improve order management process.
Intraware (ITRA) (9/20/04). Progress Software extends electronic software distribution through ITRA’s SubscribeNet.
Chordiant Software (CHRD) (9/20/04). To announce quarterly results 10/28. CHRD unveils strategy to support grid model. Certifying Linux for new business process applications.
Trikon (TRKN) (10/5/04). Sets earnings call for 10/21. Leti selects TRKN system for bulk acoustic wave application.
Corio (CRIO) (10/5/04). Announces Applications on Demand 2005. Slates earnings call for 10/28.
At some point, tech has to rally again, and, so, we add a digital security provider and an IT services provider to the Current Portfolio.
SCM MICROSYSTEMS, INC. (NASDAQ: SCMM) – $2.90. Twelve-month hi-low has been $9.50 – $2.45. Situated in Fremont, CA, with about 340 employees, this digital security provider has 15.43 million shares outstanding, $71.23 million in total current assets, $81.6 million in total assets, little debt, and $27.1 million in total liabilities. Institutional ownership is around 21%. ir@scmmicro.com
iGATE CORPORATION (NASDAQ: IGTE) – $3.80. Twelve-month hi-low has been $8.96 – $2.80. Based in Pittsburgh, PA, with about 5000 employees, this IT services provider has 52 million shares outstanding, $140.8 million in total current assets, $182.4 million in total assets, little debt, and $68.43 in total liabilities. Institutional ownership is around 29%. One analyst rates the stock as a “moderate buy”. http://www.igatecorp.com
Play the tape recorder again, as we chase another small tech with a very good-looking balance sheet. And with this company’s sizeable client base, it’s easy to add iGATE Corporation to the Current Portfolio.
Trading on NASDAQ for nearly eight years, iGATE provides information technology (IT) and offshore outsourcing services primarily to large and medium sized organizations. Operating through three subsidiaries, the company claims to be the world’s first integrated technology and operations company with a global services model. The subsidiaries are iGate Solutions, iGate Professional Services, and iGate Corporate. These services include client/server design and development, conversion/migration services, offshore outsourcing, enterprise resource planning package implementation and integration services, software development, and applications maintenance outsourcing.
The company also offers non-IT related services, including call centers, clinical trials management, and mortgage and claims processing. iGATE primarily provides its IT services through offshore delivery centers, which can deliver both near shore and offshore services. Operating across five continents, iGATE services more than 500 customers.
For FY2003, ending 12/30/03, revenues were $287.8 million with $9.02 million in losses. During the first six months of this FY, ending 6/30/04, revenue was $129.93 million with $7.45 million in losses. It should be noted that iGATE has announced that 3rdQT guidance may be under analysts’ estimates, however, this appears to be a seasonal occurrence rather than a major problem.
As we said above: beaten-down stock price, good-looking balance sheet, and a pretty substantial customer base. So, why not take a shot?
Our 24-month target for the stock is $5.50 to $6.50.
For more information, contact IGTE at 412-787-9230; investor@igate.com
Look for the November 5, 2004 Newsletter to be posted on 11/1 or 11/2.
Thank you,
George