Making Money With Voice Over IP
More record numbers and more profits for up and coming VoIP company ATSI Communications, Inc. (OTCBB: ATSX).
Now that we have that out of the way, here is a little company that can help us make money with VoIP. ASTX announced financial results for their Q2 FY08 last week and the numbers continue to climb. Actually, it was a record quarter for ATSX by just about every conceivable metric.
The Numbers Speak for Themselves
Without further adieu, the highlights:
1. Record quarterly revenue of $10.3M
2. 46% year-over-year revenue growth
3. 17% increase in VoIP carrier services traffic
4. Record gross profit of $765,000
5. 7th consecutive quarter of positive cash flow from operations
6. 5th consecutive quarter of net positive earnings per share on total net income to common stockholders of $79,000
7. Record Non- GAAP net income of $242,000
International Flair Fosters Growth for ATSI
ATSX's string of successes come as a direct result of management's ability to maintain extremely favorable business relationships in key emerging regions (namely Latin America) where many prospective telecommunications carriers lack the proper regulatory licensing and optimal transmission capabilities necessary to operate.
An entrenched position in Mexico, the world's number one user of voice traffic along with the US - and a $2 billion plus market - is surely helping the cause. This has been achieved through a unique 30-year, long distance concession license with the local government.
The agreement has facilitated transformational financial improvements for the company and also provides a high level of opportunity going forward as VoIP and Internet adoption surge in the region. Remember, ATSX logged only $1.3M in revenues for all of 2004.
Expanded Mgt. = Expanded Sales
In order to improve on recent levels of global growth, ATSX hired a global sales manager with more than 20 years of communications industry experience. Joseph M. Troche has a resume that includes building a global sales program that delivered revenues at an annualized rate exceeding $350 million in less than two years.
He was also involved in some of the most highly touted merger and acquisition activity in communications industry history, including: ATC and Microtel, Resurgens Communications Group and Metromedia, and the World Access acquisition of Facilicom.
Judging from last week's release, it looks like the personnel move was a home run. Arthur L. Smith, CEO of ATSX stated, "Our second fiscal quarter was a record quarter for ATSI in almost every metric we utilize to measure the performance of our business. We continued enhancing our sales team during the 2nd quarter to fuel future growth while developing a proprietary billing and operational support system to further facilitate a scalable business model."
Taking into consideration ATSX's stellar historical financial performance, its aggressive growth strategy and a number of extremely positive environmental factors currently driving record-demand for IP-based communications services such as those offered by the company; we believe that ATSI Communications is well-positioned for growth, both financially and in regards to share price.Labels: ATSI, ATSI Communications Inc., ATSX, OTCBB: ATSX
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
Rapid Growth at ATSI Communications Inc. Attracts $3 Million in Financing from Wells Fargo
 Rapid Growth at ATSI Communications Inc. Attracts $3 Million in Financing from Wells Fargo
In a move that validates exactly what we’ve been saying all long, ATSI Communications Inc. (OTCBB: ATSX) announced yesterday that they have entered into a $3 million accounts receivable financing agreement with Wells Fargo Business Credit, a division of Wells Fargo Bank, N.A. (NYSE:WFC - News).
What we’ve been saying all along is that ATSI is one of the most promising emerging players in the VoIP industry and a company worthy of being on your watch list.
ATSI Is Growing like Gangbusters, but the Best May be Yet to Come
 ATSI grew revenues from $1.3 million to more than $30 million between 2004 and 2007. Keeping up with the trend, but not quite achieving its 13th consecutive quarter of revenue growth, the company recently announced that first quarter FY08 revenues are up 44% over the corresponding quarter of ’07.
Furthermore, ATSI achieved both record quarterly gross profits and processed VoIP minutes of use (“MOU”) during the first quarter of their new fiscal year, which ended on October 31, 2007. So clearly, the company knows how to make money and attract new business.
Established Presence in the Lucrative Mexican Marketplace is a Key Factor Driving Growth to Current Levels  One major factor leading to the company’s growing success is its ability to maintain extremely favorable business relationships in key emerging regions. These regions include both Latin America and Asia-Pacific; areas where many prospective telecommunications carriers lack the proper regulatory licensing and optimal transmission capabilities necessary to operate.
With massive VoIP industry growth occurring in the international marketplace, ATSI’s entrenched position in Mexico through a unique 30-year, long distance concession license with the local government has facilitated improvements for the company and also provides a high level of opportunity going forward.
Apparently, Wells Fargo sees the value in ATSI’s business model just as we do here at MSP. Not bad validation of our research huh? A $40+ billion dollar a year financial institution willing to invest $3 million dollars in an emerging small cap venture.
If the big boys are willing to pony up this much due to their belief in ATSI's future, there may be no better time than the present to evaluate your stance on the company.
Here are a few quotes from both sides of the fence that should provide a bit of insight into why this is such an exciting deal:
From the Wednesday Press Release:
Brad LeFevre, VP of Wells Fargo Business Credit, stated, "We are impressed with the Company's track record and financial performance and are pleased to have the opportunity to work with ATSI. We expect that our accounts receivable funding will facilitate the Company's continued growth and business expansion. We look forward to working with ATSI in meeting its future goals."
Antonio Estrada, ATSI's VP of Finance and Corporate Controller, added, "The financing with Wells Fargo will support the execution of our business plan for FY2008 and provide us with increased cash management flexibility. This is a great example of how we are securing new sources of capital while reducing costs. As we grow our customer base, accounts receivable financing will become an increasingly important source of low-cost funding for our business."
Labels: ATSI, ATSI Communications Inc., OTCBB: ATSX
Fire in the West
 Unless you've been hiding under a rock for the past few days, you are aware of the ongoing wildfire situation in Southern California. 45 people have been injured, 5 people have been killed, 500,000 homes were evacuated and so far 1500 homes have been destroyed. While our doors were shut due to a mandatory evacuation earlier this week and the phone lines were temporarily down, things are back to normal here at MSP and everyone here and their families were fortunate enough to come through this disaster unscathed. Unfortunately that is not the case for the hundreds of thousands still evacuated and the many families returning to rubble where their homes once stood. We'd like to start off this edition by saying that our thoughts and prayers are with all of those affected by the recent catastrophe and are confident that, through the generosity of Americans, these communities will soon be pieced back together again. CPNE - To Split or Not to Split  So, in the spirit of dusting off the computers and catching up on lost time, we thought we would touch on a few topics that we felt would wrap up the week on a strong note. After taking investors on a tumultuous ride that saw share price soar upwards into the $3.50 range from under a quarter and then free fall all the way down below a dollar where it sits today, Commerce Planet Inc. (OTCBB: CPNE) announced plans to apply for listing on a National Exchange earlier in the week. While the move is very positive for the company, it may not be quite so rosy for most current shareholders. CPNE meets or exceeds every possible requirement criteria to trade on a senior exchange, except for one, share price! So, the obvious move is a reverse split. In my experience, reverse splits carry with them a very negative connotation. This is even truer over the near-term following the split. Long term, those willing to stay on board could be rewarded greatly, but if my dollar today is worth a quarter tomorrow, how can that be positive for me economically until my dollar rises back to its original value? Despite this being a risky move on CPNE's part, we think this company has the wherewithal to execute it successfully. For long-term holders, this is what we call crunch time. It's time to weigh the pros and cons of sticking it out for a home run or taking some ducats off the table. We have long been believers in CPNE and we still think this company is going to become one of our diamonds in the rough. We'd love to hear your thoughts and our blog represents a great forum for voicing your opinion. ATSI Communications: Stellar FY2007 ATSI Communications Inc. (OTCBB: ATSX), one of the most promising companies in our small-cap portfolio, continues to impress the investment community with its improving financials. Management announced last week that revenues for the 4th quarter trumped those of Q3 by almost $2,000,000 and towered over Q4 '06 by nearly 90%. ATSI has now logged 12 consecutive quarters of record revenues, 5 consecutive quarters of positive cash flow from operations and 3 consecutive quarters of net positive earnings per share. The real game breaker here at this point in time appears to be ATSI's flare for international business. Since the majority of VoIP growth is anticipated to occur in markets outside of the U.S. over the next five years, The Company's ability to establish business relationships with international telecommunications players, including the Mexican government and PCCW Ltd, continues to facilitate an improving financial situation for the company. ATSI is entrenched in Mexico, the world's number one user of voice traffic along with the U.S., and a $2 billion+ telecommunications market. This has been a key factor driving growth to current levels. ATSI's success in Mexico is facilitated by its (49%) interest of a subsidiary in Mexico, ATSI Communications, S.A. de C.V - that operates under a 30-year government issued telecommunications license similar to the license owned by AT&T's subsidiary in Mexico. Since the Mexican government has a well- documented history of being stringent in its introduction of telecommunications competition and has constructed significant roadblocks to new market entrants, possession of a long-term concession license in the country should be viewed as a major advantage for ATSI. At a price of just under $.30, we are very bullish on ATSI Communication's potential over the next 12 months. Nighthawk - Highest Revenues in 4 Years Nighthawk Systems Inc. (OTCBB: NIHK) provided guidance Wednesday on 3rd quarter earnings that marked the company's highest revenues in the past 4 years. With revenues improving on both quarter-over-quarter and sequential basis, investors embraced the guidance warmly as the stock traded up over 11% to .1140 on volume exceeding 5,000,000 shares. As of 11:00 PST on Thursday morning, share price has held stable. Could we be looking at a new bottom? Since NIHK recently acquired a high potential IPTV set-top box business and management has stated publicly that revenues for the first nine months of 2007 already exceed those of calendar year 2006, and also that future IPTV related sales could accelerate near-term revenue growth rates by a multiple of two, the market may have awoken to some extent and started pricing that potential into shares. Just a thought. . . Marmion Industries: Almost Profitable? Marmion Industries Corporation (OTCBB: MMIO) traded incredibly on Thursday with no news. The stock gained nearly 30% on volume exceeding 4,000,000 shares. For those of you still scratching your head, we thought you might appreciate a tidbit of information we stumbled upon from loyal subscribers. The fact that the market at large is becoming increasingly aware of MMIO's progress may help explain the surge in activity lately. When you cut out the company's current financing agreement, which is essential in the construction of a new facility that will sustain current growth and allow for higher volume production, MMIO is pretty darn close - if not already - profitable. Which is more than General Motors can say for itself! As a public company breaks into the market, the amount of capital necessary can often be the company's undoing. This begets the necessity for financing - often an even greater cause of demise. For a small cap company, climbing its way to profitability means chewing through large amounts of debt just to start at ground zero. Knowing the nuances of the small cap industry is vital to understanding how to invest in it wisely. That being said, profitability is not only a rarely achieved Labels: ATSI, ATSI Communications Inc., ATSX, Commerce Planet, Commerce Planet Inc., CPNE, Marmion Industries, Marmion Industries Corp., MMIO, Nighthawk Systems, Nighthawk Systems Inc., NIHK, NIHK.ob
ABI Says WholeSale VoIP Segment Poised for Growth
 With the North American Residential Video market becoming increasingly saturated - research firm ABI Research indicates that the wholesale VoIP sector is becoming an increasingly attractive prospect for cable providers yearning to hedge their losses brought on in part by declining video revenues. This could make things even more interesting for VoIP providers of all sizes, from IBASIS Inc. (NasdaqGM:IBAS) to ATSI Communications Inc. (OTCBB: ATSX). According to a recent write up by Mae Kowalke, TMCnet Associate Editor that summarizes the ABI report: "For 2007, ABI predicts that residential video will account for roughly $170 billion in revenues worldwide; voice, data, SMB/cellular backhaul and advertising collectively will add another $92 billion. By 2012, ABI estimates, though, those figures will be almost equal, at $268 billion for video and $279 billion for other services—with the supporting players overtaking video. "
Here's a link to the article. Just another promising development for capable VoIP service players:
Labels: ATSI, ATSI Communications Inc., ATSX, IBASIS, VoIP
ATSX: Growing Like Gangbusters
 ATSI Communications Inc. (OTCBB: ATSX), one of my favorite portfolio companies at this point in time, continues to impress with its continuously improving financial situation. Their revenues are up 116% year-over-year and have grown, I believe, in 12 consecutive quarters. Despite margins, which remain thin like many other VoIP players, ATSI produced record gross profits, its 5th consecutive quarter of positive cash flow from operations, and 3rd consecutive quarter of net positive earnings per share. ATSI’s recent success is directly attributable to management’s ability to maintain extremely favorable business relationships in key emerging regions including Latin America and Asia-Pacific where many prospective telecommunications carriers lack the proper regulatory licensing and optimal transmission capabilities necessary to operate. An entrenched position in Mexico through a unique 30-year, long distance concession license with the local government has facilitated transformational financial improvements for the company and also provides a high level of opportunity going forward as VoIP and Internet adoption surge in the region. Look out for this stock to continue to impress going forward. At just over a quarter, you may want to kick off your due dilly now. Look out soon for some buy side research from us that details the good, the bad, and the ugly; as it pertains to ATSI Communications Inc. Labels: ATSI, ATSI Communications Inc., ATSX, Earnings, VoIP
Business Journal Coverage of ATSI
 Often times, it is quite a chore to find good information on the micro and small cap companies MicroStockProfit.com and other independent publications cover. Even when you do find a source, they tend to have a tilt toward the buy or an optimistic way of seeing things. Luckily for followers VOIP or investors interested in ATSI Communications, The San Antonio Business Journal has decided to do a little research and report on the company. In an article entitled "Local Telecom Firm ATSI Has Found Its Groove CEO Says" It states that ATSI has risen from the proverbial ashes over the past three years and now looks to gain significant share in the global VoIP marketplace. A testament to ATSI's recent 180 degree turn around is the company's surging revenues, which grew from $1.3M in 2004 on the verge of bankruptcy, to nearly $32M in fiscal 2007 where ATSI expects to turn its first profit since inception. This one sure deserves a read. . . VoiP is where it's at Well-respected industry sources such as On World Inc. are estimating that the number of VoIP users will balloon from about 16M in '06 to 207M by 2011. And other research houses such as In- Stat state that the technology's strongest growth will occur in regions outside of the U.S. Obviously, ATSI is playing in some of the world's hottest markets. The company is also turning a profit, quite impressive as the Vonage's of the world continue to take a vicious beating and expend exorbitant amounts of resources on acquiring just one single customer. ATSX shares are currently trading at a price of $.23 on the OTC bulletin board, nearly 70% of its 52 week high of $.39. ATSX shares were formerly traded on the American Stock Exchange. In the recent San Antonio Biz Journal write-up, management states their dedication to once again obtaining listing on a senior stock exchange. Excerpt from article:Smith says that with the company's strong recent growth, the issues with the AMEX are behind it and he says ATSI will be able to meet the exchange's requirements in the future. "Our growth trend will continue," Smith says. "We have had a tremendous year." The Turn-Around ContinuesPosting record revenues each quarter since 2006, experiencing greater than 100% revenue growth in '07 while turning a profit and developing a well- entrenched position within the world's fastest growing communications markets, ATSX is also diversifying its business to facilitate further growth. From the SA Biz Journal article:Although Smith declined to provide details, he says the company is looking to launch a new product in the coming fiscal year and is looking at a possible acquisition. "We are exploring several strategic initiatives that would diversify our product line beyond the international VoIP service," Smith says. "We need to move beyond that VoIP. (The company) may take a different form in the future." With revenues surging, a bottom line improving like never before and all indicators of industry growth pointing upwards, it looks like all of ATSX's ducks are in a row. With ATSI's 10K due out in October and the stock price trading at a nearly ¾ discount from its 52-Week high, now could prove to be a bargain basement shopping opportunity before the market floods in. It's back to school time folks. Time to do your homework! Labels: ATSI, ATSX, VoIP
End of Summer Burners
 With the fall market just around the corner, we are all revving up to lose the khaki shorts and get back into the swing of trading. In the meantime, we are wrapping up our last summer trading month with a few companies showing increased revenue and progressive market strategy - both features of course being highly ranked. First on the chalkboard today is ATSI Communications Inc. (OTCBB: ATSX). Announcing a 12th consecutive quarter of record revenue this morning, ATSX is proving to be one of the biggest micro-cap turnaround stories of the past 5 years. Growing Growing Growing  During troubled times back in 2004, management proved to be ahead of the trends, effectively targeting the white hot Latin American VoIP market with a top-notch offering and growing revenues from $1.3M. ATSX now expects to bring in more than $30M during '07 (fiscal yr. ended 7/31/07). In addition to 3yr. revenue growth that exceeds 2200% and a stellar Q4 that brought record gross profits for the company, ATSX continues to see improvements trickle down to the bottom line. With consecutive quarters of positive cash flow and earnings per share (5 & 3 respectively) under their belt and a rapidly expanding market to serve (38% of Intl calls now made by Hispanics), ATSX is gaining some serious momentum heading into FY2008. Slicing into a Very Lucrative Market  Although we may not be getting any fitter, U.S. consumers are becoming increasingly health conscious. I mean seriously, you know the times are changing when not only are cardiac system nemeses such as McDonalds, KFC, Taco Bell, & Crisco taking measures to remove trans-fats from their foods - America's largest city (as well as a growing number of others) is on a quest to take trans fat off the menu for good in restaurants. Staying ahead of the trends and slickly positioning itself as an early market entrant - Tootie Pie Company Inc. (OTCBB: TOOT) announced today that that all pies produced by the company are now available in Trans Fat Free varieties. How about that for a sales pitch - both internally and for the company's who' who list of regional and North American distributors? ( Sysco, Ben E. Keith, US Foods). TOOT in the Right PlaceWith New York City and Philadelphia already in the process of cleaning up their food supplies, consumers are demanding more and more "healthy products". Exhibiting this fact, marketresearch.com has found that sales of functional foods - better defined by the source as: "those marketed primarily as offering positive health benefits beyond basis nutrition" reached $24.8 billion in '06 and are expected to increase 56%, hitting $38.8 by 2011. $100 Billion Market Further emphasizing the point, Natural Marketing Institute estimates that the total market for healthful offerings posted $91.1 billion in sales in 2006, a number expected to increase 13.1% in 2007, reaching $103.3 billion in sales. It looks as though health related and healthy food products are in high demand and an increasingly growing market and TOOT stands ready to meet demand. You cannot argue with rising revenue and being on the cutting edge of one's market. So just to end your summer with a kick, these two companies show strong growth and even stronger potential. In fact, this is exactly what you should be looking for in your micro-cap investments. Labels: ATSI, ATSX, TOOT, TOOT.ob, Tootie Pie Co., Tootie Pie Company Inc.
ATSX: Conquering the Mexico Market
 Remember when long distance calls were 25 cents a minute? Hail to the technology age where phone calls are clearer than they have ever been, cheaper than they have ever been and apparently far more efficient than I ever knew. (And yet my cell phone does not even work from my own home - how is that possible?) Regardless of the qualms with my cell phone service, I still find it quite incredible how the world communicates seamlessly and more efficiently every day. And the new thing is still not satellite ( hopefully that is next) but broadband phone service. And boy do I have the company for you to sink your teeth into.  Gracing our pages today is not only an undervalued provider of the aforementioned services but also a technology company that stands to capitalize on the ongoing de-monopolization of the Latin American communications industry while providing some very exciting investor returns in the often-slow summertime months. Boasting 11 consecutive quarters of record revenue growth, 4 consecutive quarters of positive cash flow from operations in addition to 2 consecutive quarters of earnings per share, ATSI Communications (OTCBB: ATSX) is developing a strong competitive position in the surging international VoIP market.
Announcing today that annual revenues have already surpassed $30,000,000 for FY2007, up more than 100% from the $14.7M logged in '06. With more focus on bottom line expansion than top line growth, ATSX is capitalizing on a number of extremely positive trends including: increased international trade, international travel, immigration, and overall ramped up international communications traffic.
To give you a brief background. . . ATSX's Digerati Networks, Inc. subsidiary is a well-entrenched provider of International Voice over Internet Protocol (VoIP) services. It operates its own network that now services emerging markets in Asia, the Middle East, and Latin America.
Currently, the main focus is on Mexico, the world's top producer of voice traffic. ATSX also owns a minority (49%) interest of a subsidiary in Mexico, ATSI Communications, S.A. de C.V., which operates under a 30-year government issued telecommunications license similar to the license owned by AT&T's subsidiary in Mexico. This contract has been in place since 1998 and gives the entity the right to install and operate a public network. I'm not sure there's a bigger competitive roadblock possible for potential market entrants.
Have we lost you?
 Since we may not all be fully versed here, let's expand for a minute on some of this relatively new tech jargon. According to Wikipedia - Voice over Internet Protocol, also called VoIP, IP Telephony, Internet telephony, Broadband telephony, Broadband Phone and Voice over Broadband is the routing of voice conversations over the Internet or through any other IP-based network. As evidenced in recent years, the communications industry is in the midst of a paradigm shift from traditional circuit switch networks to Internet transmission of global voice communication data. While traditional circuit-switch systems incur unnecessary costs on a per call basis because valuable network resources must be dedicated whether parties are actually speaking, data networks such as VoIP break down voice transmissions into, small, individually addressed data packages or "packets" that are routed independently and do not waste bandwidth when no transmission occurs, therefore allowing for the network to carry more calls with the same bandwidth. In response to this technical innovation, communications carriers worldwide are scurrying to provide service.
On a very positive note for ATSX, the company's current infrastructure can be maintained with very little overhead. Since Internet technology is much more efficient and routing/transporting calls online can be done at a fraction of the cost of traditional telephone communication, ATSX is not subject to direct payment for relaying calls, rather buying large high quality "pipes" into the world wide web that are billed by bandwidth rather than usage.
For those of you wondering, here's how it all works: The telecom carriers of the world are fully cognizant of the growing demand for the transmission of international voice traffic and need efficient VoIP networks to optimally support the process. The only problem is that many of these suppliers lack what it takes to meet this rising demand.
"In its VoIP operations, Digerati receives voice traffic from originating carriers who are interconnected to its network via the Internet and routes that traffic over the Internet to local service providers and carriers in the destination countries with whom the Company has agreements or partnerships to manage the completion of the call. Digerati's global VoIP service enables carriers and other communications service providers to outsource international voice and fax traffic." (ATSX annual filing) This is where ATSX has grown its revenues from $1.6M in '04 to already $30M thus far in 2007. The company's key competitive advantages lies in its holding of proper licenses, network redundancy, favorable termination agreements, and the presence of an optimal business infrastructure and relationships in some very lucrative markets - particularly Mexico. While the market is flooded with "rip off" services, mainly of low communication quality that simply "hacks" in to existing pipes, and also controlled to some extend by major carriers, ATSX has been able to gain a solid foothold by building a brand associated with value and quality. According to the company. . . Digerati's market for international voice traffic is growing 11% per year and was expected to reach 291 billion minutes of use ("MOU") in 2006. ATSX also states that International VoIP traffic is growing faster than traditional circuit-switched traffic, accounting for 16% or 41 billion minutes of all international voice minutes in 2005. All This - Undervalued  In terms of valuation, there is a strong argument for a much higher share price than current levels - by as much as 2X - 4X. For the sake of discussion, let's look at the 2X argument. Applying a conservative P/S multiple of .77 (based on IBAS: NASDAQ) on our trailing 12 month revenue of $27 million, market cap would be approximately $21 million. With $37 million shares outstanding (only overhang is management and board stock options / no warrants) this would equate to roughly $0.56 per share or a 133% premium to today's levels.
We think the facts and trends here speak for themselves here. When it comes to communication, opportunity is stronger in regions lacking infrastructure. As ASTX builds a name for themselves in one of the largest (and most needing) communication markets, we think we will see much greater things to come from this company - and some pretty nice returns for shareholders. .
Labels: ATSI, ATSX, VoIP
|
|
