What Does Google’s Purchase Mean for Commtouch??
Written by: Aaron Katsman | July 9, 2007
By Aaron Katsman
IsraelNewsletter.com
Today’s purchase by Google (GOOG) of the privately held email security firm Postini for $625 million has sent the shares of rival Commtouch (CTCH) soaring up 8.5%. As I posted a month and a half ago, Commtouch is focused on email defense as well. By the year 2010, Gartner predicts that there will be 2.5 billion e-mailboxes. With over 180 billion messages per day, 85% of which are spam, Commtouch develops and provides proprietary anti-spam, Zero-Hour™ virus protection and Reputation Service solutions.
Roger Carter in his blog speculates concerning a new OEM deal Commtouch may be working on with Checkpoint (CHKP), wherein Commtouch’s technology could be deployed within Checkpoint’s new UTM productline. Aside from the possible Checkpoint deal, Commtouch is signing bigger and bigger OEM deals, and this has yet to be fully reflected in Commtouch’s sales pipeline and revenues.
Google’s acquisition proves that Commtouch is heading in the right direction. With Q1 revenues increasing over 63% from same period last year, and generating operating cash flow of $953 thousand during Q1 2007, I am eagerly awaiting their Q2 numbers as I expect both revenues and profitability to continue to grow strongly.
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Disclosure: Author is long both CTCH and CHKP as of 7/9/07. He has no position in any of the other company’s mentioned.
Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
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