GlobalSCAPE Ready for Major Rebound

GlobalSCAPE (GSB) is a software development company that develops products such as file transfer protocol [FTP] client programs, including CuteFTP, CuteFTP Pro, and Secure FTP Server. GlobalScape also develops Enhanced File Transfer [EFT] Server and Data Replication Products for Wide Are File Systems.

I believe the company is undervalued and is ready for another of it's growth spurts. GlobalCAPE has healthy financials with zero long-term debt and a good pipeline of new products.

The real challenge with GlobalScape is that it is a small-cap,therefore, it can swing rapidly up (or down) with good news (or bad). The last few quarters earnings have been flat - thus the share price has fallen to a low point. But the pipleline has been growing with new products.

GlobalScape Positives:

• Forward PE of 5
• PEG of 0.15
• Insider Buying Actively Occuring
• New CEO James R. Morris in Place
• New AS2 Module Announced - http://biz.yahoo.com/bw/080729/20080729005110.html?.v=1 - which is excellent for the meeting the required credit card, banking, & financial institutes secured transactions standards
• New File Transfer Website Announced - CuteSendIt.com - http://biz.yahoo.com/bw/080701/20080701005208.html?.v=1 - easy to use for non-IT folks = nice revenue channel

Based on announced new products above, upcoming new products, new partnerships, FIPS certfied products for secured file management, very low PEG, and a past history of growth,  I perceive that the next 4 quarters the stock will move from it's current bargain share price of 1.35 to 4.00 or higher!

GSB should be trading at a Forward PE of a 15. A good comparison is the larger competitor Commvault (CVLT) which has a forward PE of 15. GlobalScape should partner more with international ISVs like Commvault does.

Disclosure: Long position in GSB

As always, be diligent in your own due diligence on any investment that you make.

Comments

[Mighty_Mouse:]

Hi Philip,

I was reading your blog again and looked into commvault more about their ISV's, IHV, and SI's. It seems like Globalscape could use all three of these in partnerships. Then I was reading the Sept 22nd article in Information Week on Cloud Computing and its mention of Elastra and Kaavo's providing layers and tools that "span cloud services from different vendors ... interface multiple cloud services including those from Amazon, Flexiscale & GoGrid". So I have an idea/question for you:

The Globalscape conference call is coming up in November, apparently the 13th I saw somewhere online. I've never heard you on one of the calls and would like to invite you over to quiz the company on the call as to whatever you'd like to.

Thanks for considering it.

MM (GN)

2008 Oct 26 06:43 PM

[Philip Obal:]

GlobalScape Major Announcement on 2 Products - Received CoN from US ARMY Network Technology Command

Monday November 3 - SAN ANTONIO--(BUSINESS WIRE)--GlobalSCAPE, Inc. (AMEX: GSB - News), a leading developer of file-centric solutions for the internet, today announced that Secure FTP Server™ FIPs version 3 and CuteFTP Pro® version 8 have received the Certificate of Networthiness (CoN) from the US Army Network Technology Command (NETCOM). A CoN is required for all systems operating within the Army Enterprise Infostructure (AEI). The AEI includes the key information technology systems that provide the Army with agile and adaptive capabilities, powered by net-centric, interoperable access to knowledge, systems, and services.

See press release for the rest of the details. GlobalScape bumped up 25% on this announcement (GSB is undervalued).

2008 Nov 05 11:31 AM

[Philip Obal:]

I will put the conference call on my calendar and try to ask some "tough" questions (intriguiging/thought provoking questions).

2008 Nov 05 11:33 AM

[Philip Obal:]

Over the last 3 weeks - The press releases issued by GlobalScape are announcing new products AND new certifications. Looks like GlobalScape is continuing to "prime" the pump!

2008 Nov 24 11:19 PM