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Interwoven, Inc. (IWOV) weaves content across organizations. The company's enterprise content management software suite helps companies create, manage, and store corporate content -- such as documents, spreadsheets, e-mails, and presentations -- then distribute it across intranets, portals, and the Internet. Interwoven's software products include tools for collaborative document management, e-mail management, image processing, Web content management, digital asset and records management, and content distribution. The company also offers installation, project management, and workflow strategy services.

This is a small company (revenues of $200 million for 2006) and a market cap of $675 million) but the stock's price has been something to behold. It peaked in 2000 when it hit $273.90 a share and hit its trough in 2003 at $5.30 (all prices split adjusted for 2 for 1 splits (twice) and a reverse split (1 for 4)). The stock looks to be heading north again after a relatively uneventful period that ended in early 2006 when it started its march higher. Can it continue its current trajectory?

Here are some of the facts: There's plenty of cash in the exchequer, about $160 million. Current assets are more than 2 times current liabilities. Earnings are finally positive with 2006 likely to tally 10 cents a share while analysts are looking for 20 cents this year. Revenues are expected to climb by 10% to $220 million. There's no debt on the books.

License sales are going well as businesses are starting to spend more on their IT departments. Also growing is the enterprise content management software market, probably about 10% this year, an area where IWOV should maintain or increase its market share. In the third quarter of last year, the company added 68 new accounts to bring its total worldwide clientele to almost 3700.

Two programs in particular are helping drive the top line higher: Worksite and Teamsite. IWOV is getting good orders for these from many different industries. That's because it can customize the software to any company's needs. There's currently strong demand by companies to manage their flow of internal information.

Interwoven is in a sweet spot. Most industries are looking to upgrade internal technology to better handle information flows. They need the software that IWOV provides to be more efficient. And because companies must license the products, the certainty of continuing streams of revenues is fairly high. With new additions and high retention of current clients, IWOV seems to have a pretty bright future. Of course, that's what most investors thought 7 years ago when the stock hit $273 a share.

If your risk tolerance is very high, you might want to spend a little more time finding out about IWOV. The basic numbers look good. Profitability is a fact, not a promise anymore. This is a small stock so be aware of the volatility that implies.

IWOV 1-yr chart

IWOV

Disclosure: Author has no position in IWOV.

Source: Interwoven: Profitability is a Fact