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  • Allot Communications Soars On Announcement Of Deal With Tata Communications 0 comments
    Mar 11, 2013 6:38 AM | about stocks: ALLT, MNOV

    Allot Communications Ltd. (NASDAQ: ALLT) announced on February 20 that Tata Communications Ltd. has selected Allot Service Gateway solution to provide cloud-hosted policy services to their Mobile Network Operator (MNO) customers. The deal has it that Allot Service Gateway solution will feature in Tata communications' new Hosted Policy Engine, the world's first cloud-based solution for policy control, which will improve the profitability of MNOs. Tata's cloud-based services are less complex and are time and cost effective for deployment and ongoing operations. These features make it a good alternative for MNOs

    On announcement of this deal, Allot stock rose to a seven-week high at about $15.23 per share, which is the highest Allot share price since the close of market on January 2. This has brought about speculation that this deal could bring better fortune to Allot stock in the near future. The question to be answered in this article is; how will this deal affect Allot stock? To answer this, we'll look back on two deals that Allot has completed in past to point out future trends.

    The most recent deal that Allot completed before that of Tata is the deal with a certain Tier-1 mobile operation; a deal that's worth $6 million. This deal was announced on February 11. There was an increase of about 0.57 percent in share price on the day this deal was announced compared to the closing share price of the day before. On May 1, 2012, Allot acquired Ortiva wireless. Allot closed on that day at about $26.30, which represents about 7 percent increase compared to the price at the close of market a day before. There's a trend here; Allot stock usually plunges on the day a new deal is announced. For weeks after the May 1 deal, Allot stock was riding high within the range of $27 per share, an increase of about 3 percent since the deal was announced.

    Moreover, it is likely that this deal will increase the revenue generated by Allot from Asia-Pacific. In 2012, sales to Asia-Pacific contributed about 25 percent to Allot's total revenue. 25 percent of total revenue from this region alone shows that there is good potential for Allot in this region. In addition, Tata has a large customer base to which it intends to market Allot's products.

    Conclusion

    Investors need to be aware of the fact that Allot is strong in emerging markets. The company was the first service provider in India. As such, this is the best time to add Allot to your portfolio, as Allot share price could be on the rise soon.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: ALLT, MNOV
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