ATSX Revenues Grow by Nearly 50% During Q2 FY08
With budgets worldwide being tightened like never before, the quest is on to eliminate unnecessary costs. One area of focus for many is the monthly telephone bill and one company capitalizing on this trend is ATSI Communications Inc. (OTCBB: ATSX).ATSX wowed us all today with the announcement that revenue for the three months ended January 31, 2008 reached $10,293,000, a 46% improvement over revenue for the three months ended January 31. Management also stated that the quarterly revenue figure would outpace the record notched during their first fiscal quarter of ’08 by $866,000.
So what does all of this good news equate to, besides a solid top line?
· the 2nd consecutive quarter of record gross profit;
· the 7th consecutive quarter of positive cash flow from operations, and;
· the 5th consecutive quarter of positive net income.
VoIp a Hit with Consumers and Enterprises Alike
Quite similar to the trend towards increased consumer adoption of VoIP to reduce monthly phone bills, Telco’s are increasingly implementing VoIP into their own networks to cut transmission costs. Essentially, VoIP affords these companies the ability to drastically reduce operating costs and further bolster their bottom lines.About the stock: ATSX Grows Like Gangbusters without Diversification or Partnership
The stock has trended downwards since November of ’07 and I believe that some of the reason lies in the market’s belief –albeit a wrong one – that the company could not sustain or improve on its current, staggering growth rate without making some type of major move. The bottom line has also been an area of concern recently, but we now have seen positive net income for 2 consecutive quarters. The situation here may not be as bleak as some might say.
For the record, IBASIS INC (NasdaqGM:IBAS), a leading VoIP player, logged a net income of roughly $180K on revenues of just over $154M for the period ended 9-30-07. If ATSX can continue on with their streak of positive net income while growing revenues and maybe even bringing on a new, higher margin business segment, we could have some real value on our hands.
I myself was even of the opinion that 2007 would have been a great time for an acquisition (a services business) or a noted move into the mobile sector. Those moves on would be great, but what’s even greater is the fact that the company grew almost 50% on a year-over-year basis during Q2 and set another all-time sales record JUST BY STICKING TO THEIR GAMEPLAN. If they can make a move now that both ads to revenues while solidifying margins, we are looking at a stellar mid-tier VoIP player.
One point that I have made time and time again in my coverage of both the VoIP industry and ATSX is: that If players such as ATSI can optimize their and bring revenues from $30 million (which has grown from $1.3M in ’03) into the triple digit millions range, they could prove to be quite attractive to the AT&T’s of the world looking for a leg up on the global marketplace.
So, if ATSI can keep on pace with its current growth rate and bring revenues into the $50-$60 million range by the end of their fiscal 2008, they are half way there or further. And that is without tapping into any additional avenues for future growth. As I’ve mentioned before, hitting the triple-digit millions range in regards to revenues, in my opinion, could most easily be achieved by making moves that will facilitate additional products traveling through their existing pipelines. With the convergence of voice, video, data, and mobile upon us, the options for enhanced offerings seem somewhat plentiful.
If ATSI can continue to position itself as an attractive acquisition candidate as it has thus far, the company could certainly demand a premium from an industry big dog. I’m guessing the price would make current levels laughable. It will be interesting to see how the market reacts to today’s news, but keep this in mind. The AT&T’s of the world are watching.
Labels: ATSI, ATSI Communications Inc., OTCBB: ATSX
posted by "Staff" at
8:27 AM
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