Crossroads Systems (NASDAQ:CRDS) just announced that Scottsdale, Arizona-based Meritage Home Corporation, a leading residential building company, has selected and deployed Crossroads' SPHiNX virtual tape solution, a product that provides complete data protection, consolidates backups, and streamlines disaster recovery. Meritage has built more than 84,000 homes since its founding in 1985 and relies on the constant availability of important data, including blueprints, project management information, and customer and employee data, the company said in a release.
In my first article on Crossroads, I argued that the company has huge upside potential, from both its core operating business of data storage and protection, and through monetization of its 100+ patents. According to a report by Global Industry Analysts, Inc., the global market for network-attached storage is expected to reach $7 billion by 2017. To capture part of this market share, Crossroads has its Strongbox product, a network-attached storage solution which aims to lower the costs of long-term data preservation. Recent Strongbox wins include deals with Massasoit Community College and Ithaca College Communications School. However, the SPHiNX product could be another potential game-changer for Crossroads, as this latest deal shows. In addition, the company recently announced that is has engaged attorneys of Markman Advisors for patent monetization consulting services, as it seeks to monetize its non-972 patent portfolio, which consists of 121 patents and pending patents developed over 16 years. Some current lawsuits outstanding include suits against Dot Hill Systems, Oracle (NASDAQ:ORCL), Huawei Technologies, and Dell.
With $10.7 million in cash at the end of last quarter, recent product wins that should add to revenue growth, and the potential for significant monetization through the company's 100+ patents, Crossroads remains well positioned for the future. Insiders continue to buy shares, led by Jeffrey Eberwein, a director and chairman, who bought $2.9 million worth of stock in a March 31 placement. I rate Crossroads as one of my highest conviction picks, and plan on adding more shares on any future pullbacks.
Disclosure: The author is long CRDS.
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