Although it was expected that Ninetowns would be chosen to provide service for this software since Ninetowns created the software used by the PRC, this is still a significant milestone for Ninetowns. The ability to service the PRC’s free import/export software should allow the import/export software and service segment of Ninetowns to get back into the black.
The real growth for Ninetowns is still tied to the B2B initiatives recently started by the company including TooToo.com. However, the new servicing contract should allow Ninetowns to make a small profit on the import/export software side and create cross-selling opportunities for Ninetowns B2B platform.
This new contract win has made Ninetowns current valuation even more compelling. The company is sitting on about $115 million in cash, it has zero long term debt and a market cap of only $141 million. Ninetowns should now have some breathing room to fully develop B2B search initiatives without depleting cash reserves.
NINE 1-yr. chart:
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