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Amazingly, Widepoint Corp. (WDPT) stock remains largely unchanged today, following an overly encouraging Q2 earnings conference call held yesterday after the close.

The earnings themselves were a non-event, though it can be noted that the top-line of $4.8 million in revenues represented an upside surprise of around $2 million attributed to software sales and engineering work for the Department of Defense external certificate rollout. Most importantly, with HSPD-12 now only 2 1/2 months away from implementation and the various government agencies scrambling to demonstrate competence and compliance with the directive, the Widepoint story (read our initial April report on Widepoint) is literally becoming more compelling by the day.

The gem of the call came when the chief technical officer of Widepoint (and CEO of wholly-owned subsidiary Operational Resource Consultants) revealed that multiple proposals from various government agencies indicate a collective minimum of three million certificate requests for the first year, with the possibility of another two million to come over the next several months. Without wanting to sound cocky, it was added that the company expects to land "a majority" of this business, given ORC's vastly superior competitive positioning in the marketplace as the only company fully technically qualified by the U.S. Government to provide complete end-to-end solutions for HSPD-12 (read the July 25th release).

Let's put this into context by applying some pretty simple math. Certificate credentials cost between $50-$150 per year, depending on the scope of their use, with early adopters averaging $100-110 thus far. Significantly, it was added that 10% of this initial three million base relate to an increasing need for non-Department of Defense government web and e-mail servers, and that these component certificates are running at a rate of $500 per credential per year. Therefore, low end, we can take 2.7 mil @ $50 apiece and 300k @ $500 apiece, and come up with an estimated first year pie of $285 million - of which Widepoint expects to garner more than half. With seven sizable proposals involving over 100,000 certificates apiece under discussion, capacity already tooled to issue one million certificates before year end, and trailing 12-month revenues of around $13 million, it doesn't take a genius to see the dramatic revenue ramp to come at Widepoint - yet the market isn't offering any type of reaction today.

Maybe the problem is that WDPT hasn't yet graduated off the bulletin board; management indicated it expects a move to the AMEX by the end of September. More likely, maybe with WDPT stock better than 70% institutionally held already and very few retail players, it is going to take more than just mere talk to get this stock moving out of the range it has been consolidating in for the last seven months. Holders and potential size buyers are waiting for the real deal - for the next card to be turned, for the gun to go off - for the announcement of the first contract award.

Management has made it clear that they expect a number of contracts to be in place by September 30th - a mere six weeks from now - so this type of continued sideways price action could easily turn out to be a gift for those who want to initiate or add to their positions before the Widepoint horse breaks from the gate. In the meantime, we remain enthusiastic about WDPT stock's near and long-term prospects, and we encourage all readers to investigate purchase of the name.

click here for the Q2 release

LISTEN to the Q2 call

Read the 10-Q

Source: WidePoint Unchanged Despite Strong Earnings Report