Vodavi Technology Remains a Bargain (VTEK)

| About: Vodavi Technology (VTEK)

Shares of microcap VoIP equipment provider Vodavi Technology (VTEK) remain in the bargain bin even though the company inked another supplier agreement this week. Speakeasy, one of the nation's largest non-incumbent broadband ISPs (i.e. not phone or cable company), will market Vodavi's 6800 series of phones to Speakeasy's business VoIP customers.

I don't expect substantial returns from this agreement alone, but the four agreements Vodavi announced this year -- with Cendant, Covad, CompUSA and now Speakeasy -- should together boost revenues in coming quarters.

Vodavi shares remain dirt cheap on a fundamental basis. At current prices, Vodavi sports a market cap only slightly above $20M. But even that understates the value. Vodavi has $7M in cash on the balance sheet and no debt, giving it an enterprise value around $13-$13.5M, or less than one third of the company's trailing twelve month revenues of $43.81M. Insiders are not selling, and the company counts both strategic buyers (an LG-Nortel partnership) and institutional owners (Barclays) among its largest holders.

I own Vodavi and will likely buy more at these levels.

VTEK 1-yr chart:

VTEK 1-yr chart

DISCLOSURE: I am long VTEK. Not a recomendation to buy or sell any security.

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