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Mark Gomes
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With over 20 years of professional experience, Mark Gomes is among the world's most experienced technology stock analysts. During his time as a contributor to Seeking Alpha, over 50% of his official picks were either acquired or tripled in value. Currently, Mr. Gomes is the CEO of Pipeline Data,... More
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Poised To Triple
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  • Attunity Expanding Its Presense At Oracle OpenWorld 3 comments
    Oct 2, 2012 8:58 PM | about stocks: ORCL, ATTU

    It's official. In yesterday's Instablog, we discussed an Attunity (NASDAQ:ATTU) announcement that leaked out into the media. That information proved to be accurate. Indeed, Attunity's data replication system for big data is being featured at Oracle (NYSE:ORCL) OpenWorld this week. In addition, the company's new offering for Oracle's Exadata database appliance was announced this morning. CRN.com leaked that announcement yesterday and ranked it as the #1 "Hot Product" to see at the conference.

    What we find interesting about this situation is that Oracle is playing host to ATTU despite ORCL's ownership of GoldenGate Software. That's relevant for two reasons:

    1. GoldenGate was acquired for its ability to provide real-time capabilities for data integration, availability and migration. At the time (2009), this technology was already considered to be in high demand…and that's before Big Data took the world by storm. The proof was in the numbers -- GoldenGate had grown to $100 million in revenue at the time of the buyout. Clearly, ATTU is bringing some value-add to the table. ORCL not only welcomed ATTU's presence at OpenWorld, it is also a strategic partner.

    2. Based on our research at Pipeline Data, ATTU is the strongest remaining independent vendor in the space, based on technology prowess and revenue. They appear destined to follow a similar path as GoldenGate. After posting just $10 million in 2010, ATTU grew 50% in 2011 to $15 million. The company is on track to grow even faster this year. Sales are now on a $25 million run rate -- total revenues increased 110% to $6.4 million in the June quarter, while net income jumped 185% to $0.5 Million.

    Of course, we're still in the early innings. There is plenty of heavy lifting left to be done. Many risks come along with that. However, ATTU has its wagon hitched to one of the hottest areas of technology - Big Data. As such, it has a potentially long runway of growth ahead. It also has several ways to expand its current product portfolio and take fuller advantage of its extensive partner network. This will require continued execution on the sales front, along with M&A and R&D. If successful, we believe ATTU could eventually find itself on the receiving end of an acquisition, just as GoldenGate did.

    Accordingly, ATTU remains a component of our Stocks to Triple Portfolio with a "Gold Mine" classification. See our last update for details.

    Disclosure: I am long ATTU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas Stocks: ORCL, ATTU
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Comments (3)
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  • Mark Gomes
    , contributor
    Comments (2013) | Send Message
     
    Author’s reply » Here's the ATTU update as promised. Cheers.
    2 Oct 2012, 09:00 PM Reply Like
  • bazooooka
    , contributor
    Comments (3199) | Send Message
     
    Mark,

     

    I agree that ATTU looks like it will be taken out before it gets to a 50M revenue run rate in the next year or so.

     

    However, with a current market cap of 80M on the current run rate of 20M+ do you still think there is still 100% upside from these levels? I

     

    I'd think a market cap of over 150M would require a company doing 50M to 75M in revenues unless Oracle pays a larger multiple than they have in the past.
    3 Oct 2012, 05:36 AM Reply Like
  • Mark Gomes
    , contributor
    Comments (2013) | Send Message
     
    Author’s reply » Bazooooka,

     

    That's a great question. I'll refer you back to my valuation analysis, here: http://seekingalpha.co...

     

    You'll see that ATTU's current revenue number will fool individual investors into staying away, because they don't understand that ATTU's growth rate and high target operating margin model will support upwards of $15 million in net income by 2015. Slap a 25 P/E on that (under the management-stated assumption that they continue to grow 30% annually, as Big Data continues to emerge) and you have a $375M market cap ($45 per share).

     

    That leaves a lot of room to be conservative in your assumptions and still win big.

     

    Cheers,

     

    Mark G
    3 Oct 2012, 02:14 PM Reply Like
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