Barron's Likes TGLO, But Should You? (TGLO, EBAY, ELNK, GOOG)

by: David Jackson

Barron's Technology Trader column (paid sub req'd) gushes about the current incarnation of (ticker -- and new name -- TGLO). The bull case is: TGLO's enterprise value is $50 million (230 million shares at $0.30 each minus $20 million in cash). For that you get 5 million Voice Over IP subscribers plus a subsidiary called Tralliance that has control over the new .travel domain name. Since eBay paid $50 per subscriber for Skype, Barron's argues, TGLO is a bargain.

I remember visiting TGLO with another hedge fund manager over a year ago, just as the company was preparing to roll out its VoiceGlo VoIP service. Two things were striking. First, neither president Edward Cespedes nor CEO Michael Egan seemed to have any telecom or Internet experience. They came across as opportunistic investors rather than passionate managers. And second, the technology demonstration didn't work. I'm not kidding. It just didn't work. The CTO's office was full of wires and broken handsets.

That's not so say that TGLO's VoiceGlo service isn't working now. Rather that eBay paid up for market leadership, best-in-class technology and growth. Not management by a team of opportunistic investors. Reading between the lines of the Barron's article, it sounds like nothing's changed at TGLO. After all, if TGLO really is the "largest independent in the [VoIP] category", why is a company of such small size and limited resources getting into the domain name registration business? Somehow I don't think the other VoIP players, such as eBay (EBAY), Google (GOOG), Yahoo (YHOO) and Earthlink (ELNK), have too much to worry about. And as an investor I'm wary of buying TGLO, even at 30 cents.