The Future Looks 'Rad' for Radvision: Good Entry Point Now

| About: RADVision Ltd. (RVSN)

Helped by their strong relationship with Cisco Systems (NASDAQ:CSCO), Radvision (NASDAQ:RVSN) continues to produce strong earnings growth. RVSN, an innovator in the video-conferencing over IP, wireless and desktop markets, has used its strong technology to take video conferencing to the next level. The company posted a first quarter revenue increase of 21% over Q1 ’06, surpassing the company’s own revenue guidance.

Boaz Raviv, Chief Executive Officer, commented:

Our first quarter growth was driven by continued strong demand for our SCOPIA[TM] video platform in the room conferencing market and the success of our channel partner relationships led by Cisco. In total, our room conferencing revenues were almost double those of the first quarter last year as were our revenues through Cisco.

With over 35% of revenue coming from Cisco, there is room to worry that there isn’t a large enough diversified revenue stream for RVSN. After all, if Cisco were to opt out of its agreement, Radvision would be in trouble. I don’t think that that is going to happen so soon. Keep in mind that they have been working together since 2000, and Cisco has made no secret of their push into the video market. Why would they change partners mid-stream, especially after such a mutually beneficial relationship? I actually think that the more reasonable scenario would be for Cisco to buy RVSN. But who knows?

Even though RVSN relies on Cisco for the lion’s share of the business, it is nonetheless rolling out new products, which could give a good boost to revenue in the late 3rd or early 4th quarter of ’07.

Raviv adds:

We have now introduced SCOPIA Desktop, which we believe represents another major advance in the Unified Communications market place. SCOPIA Desktop is a simple solution that extends the reach of traditional room conferencing to remote users without complex software installations, licensing fees or firewall transversal problems.

In other words, you can sit at home and join your conference without a lot of technical complications.

RVSN announced a share buyback program in Q4 ’06, and with over $155 million in the bank, not only should the company make good on their repurchase plans, but it should also have money left over for acquisitions.

With the stock trading in the 19.60 range, it’s down over 20% from its high, which could indicate a good entry point for long-term investors.

RVSN 1-yr chart