Covad Agreement Lifts Shares in MicroCap VoIP Player Vodavi Technology (VTEK, DVW)

The Microcap Speculator submits: Shares of thinly-traded Vodavi Technology (ticker: VTEK) were up over 9% today after the company released news of an agreement to supply VoIP equipment and support to Covad (ticker: DVW). Vodavi will supply its 6800 series phones for Covad to sell to small and very small business customers. The agreement follows last week's announcement of a deal with CompUSA, and last month's announcement of a deal with Cendant.

These three agreements solidify Vodavi's position as a contender (if not a leader) in the low-end VoIP phone market. It is true, as more than one reader has pointed out, that Vodavi does not compete on the high end with the likes of Cisco and Avaya. That's not important to me. There is a lot of money to be made on the low end (just ask the heirs of Sam Walton).

The phones will be manufactured by LG-Nortel Co. Ltd., Vodavi's strategic partner and largest shareholder. I believe that this is the first time the company has disclosed a specific sourcing arrangement with LG-Nortel.

DISCLOSURE: I am long VTEK. I have no positions in DVW, LG, NT, CSCO, AV, or CD. Not a recommendation to buy or sell any security. For informational and educationall purposes only.

VTEK 1-Yr Price Performance: