ClickSoftware (Nasdaq: CKSW) announced disappointing quarterly earnings yesterday. The company’s EPS and revenues were below what we and the rest of the Street were expecting. We think expectations got a
little bit ahead of themselves. While we’re disappointed, the company is continuing to perform and still expects 20-25% revenue growth in 2008. The backlog was strong, over $25 million at the end of 2007.
We think the miss was due to slipped closings of a couple deals that we believe the company ultimately will close in subsequent quarters. At current valuations and subtracting the cash, the company is trading almost at trailing revenues. Check out why we like the firm’s workforce management and service optimization.
We’re sticking with CKSW and would be buyers here.
Written by: Zack Miller | January 9, 2008
We recently got a chance to sit down with Jon Medved, a rock-star in the Israeli tech world, to discuss his new startup. This interview appeared as part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com
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Jon, can you tell us what Vringo’s all about?
Jon Medved: It’s not just a company story; it’s a story about trends. The trend is personalization 2.0. The big bonanza which most investors missed, myself included, was ringtones. If you were pitching VCs a ringtone company in 1999,you
wouldn’t have even been able to get a meeting. You would have been shooed out. The ringtone business has been a goldmine for those investors who got it. Now, it’s a $6 billion business worldwide. It’s becoming a major source of revenue for the music labels. Take Universal Music Group, for example. Music star, Akon, recently sold a batch of 11 million ringtones. And unlike iTunes, which sells songs for $.99, these ringtones go for $2.
It’s the drive for human expression to want to stand out in a crowd, to personalize things, to make them mine. Just like Jibbetz does for Crocs shoes, allowing you essentially to pimp your shoes, like wearing a T-shirt with a slogan on it, or slapping a bumper sticker on your car — Vringo is doing the same thing for the phone. (Continue »)
ClickSoftware (CKSW), was January’s Stock of the Month as part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com
As part of our January edition, we also published an interview with Pointer Telocation’s Chairman. The stock is up 10% in just 5 days.
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Background
ClickSoftware Technologies (Nasdaq: CKSW) provides workforce management and service optimization solutions. ClickSoftware’s Service Optimization Suite provides an integrated solution for optimized decision making used throughout organizations. Over 100 customers in telecommunications, utilities, financial services, aerospace use the company’s products. It markets its solutions via a direct and indirect sales force into North America, Europe and the Asia Pacific Region.
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The entire interview with Stearman Capital’s, Zachary Scheidt, is part of our new subscription newsletter, Israel Opportunity Investor. You can find out more about the product and the opportunities we cover at www.israelnewsletter.com
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Can you tell us a bit about your firm?
Zachary D. Scheidt: Stearman Capital is unique in that it focuses on stocks that are new to public markets. While our formal universe includes stocks that have been public less than five years, most of our investments turn out to be companies that have issued stock within the past 12 to 18 months.
We believe that there is an information disconnect for many names in our universe because up to this point there has been little or no media or analyst coverage leading up to the IPO. Once a company comes into the public realm, the first people to write about the names usually have an agenda. Underwriters issue reports after the quiet period is over with the hopes that their positive rating will propel the stock higher. This helps their reputation when soliciting investment banking business from other clients and also creates goodwill with the management of the newly issued stock. Goodwill is important in their business model because a large portion of companies who issue public stock come back to markets to raise additional capital.
I believe that Stearman is able to capture positive returns by digging through the primary information from the company as well as third party research to find the nuggets of truth that point to the eventual direction of these often misunderstood stocks.
One more advantage that we have is our relationships with multiple underwriters. When a company is pricing an IPO, we take calls from most of the major brokerages selling the deal and are able to pick up on the demand for a particular issue. If a contact calls in and says, “This deal is going to be red hot and I can get you as many shares as you want!”, we know that there is excess supply and the underwriters are pushing to get the deal sold. So, while you have to read between the lines at times, the relationships with these important firms gives us an edge that is difficult to quantify and nearly impossible to duplicate.
How does a firm located in Atlanta, GA start investing in small Israeli companies?
ZS: Well, believe it or not, the process is very simple. As Israel’s economy continues to evolve and new enterprises demand capital for expansion, companies often come to US markets to raise that capital. With technology making the world smaller every day, our research process is able to grapple through the same information that hits the desk on the 87th floor of a Park Avenue office (with considerably less overhead, I might add) and we are able to make a well-informed decision based on publicly available information.
To me there is not much difference in picking a stock based in NYC, San Francisco, London, Buenos Aires, or Tel Aviv. While currency issues come into play, local culture and customs are of course important, but the bottom line is whether I can make money trading the stock or not. The price of the stock will fall in line with supply and demand and that will be based on the public expectation of the future prosperity of the business. So if I can get an edge on what that public perception will be, I can trade a stock successfully, no matter where the company is located. (Continue »)
