Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
Turnaround Stock of the Year - Multi-Bag Potential Abounds
Quote of the day
"Success is how high you bounce when you hit bottom."
~ General George Patton ~
A New Ballgame Begins - As New SEC 10 Q Report Confirms …and Orders are pouring in -
How do you beat - better, faster, and less expensive?*
IceWEB Inc. (OTCPK:IWEB) OTCBB
Better and faster and less expensive? Indeed, and (OTCPK:IWEB) just won the DCIG Industry Replication Software Award for 2012 competing against all the big guys, EMC, NetApp, et al.* link here for the NY Times article.
Back in 2006 (OTCPK:IWEB) traded at $2.50. Now its trading at $0.165 and just coming off its low, but today is a new ballgame and a mighty turnaround is underway, even though share price has yet to catch up to the story.
First, a little backdrop and a bit of musing. Those of us who have been around a while know that companies come and go. However, occasionally during such a multi-year decline a stock can make a dramatic and full turnaround. This usually happens when a new product line that the market wants is introduced, and the turnabout is quite often accompanied by new management. (OTCPK:IWEB) is such a case.
Here's the short version of the story: (OTCPK:IWEB) has built an award-winning family of high performance data storage array products with enterprise-class features and performance capabilities at a fraction of the price of traditional providers. And now the market is discovering it and new orders are pouring in, as the recent press releases demonstrate.
To illustrate the cutting edge technology of (OTCPK:IWEB)'s new product line, the company announced its new "IceTIME™ Guarantee" in late January; it promises a setup time of five minutes or less for any of its unified storage appliances, compared to the hours needed with the more complicated systems manufactured by larger vendors.
For investors, finding a turnaround scenario can be hugely profitable as the company shares have been on a long, tedious and painful washout. Stocks that portray this kind of negative trendline are typically hated by the old shareholder base, who are deeply "under water." The company might stay alive - barely - until... This picture is represented in technical terms by the formation of an extended base or trading range. All of the above has occurred in the case of (OTCPK:IWEB) and, technically speaking, after a multi-year decline, in my opinion this stock is ripe for a substantial advance: especially given that after year-end tax selling drove price to new lows the core business was in fact turning around, as the new 10 Q indicates. http://finance.yahoo.com/news/IceWEB-Reports-Fiscal-2012-iw-3118674052.html?x=0
(OTCPK:IWEB)'s product line of state of the art data storage appliances, especially in the high end, is sold through a nationwide network of over 1200 channel partners and at a fraction of the cost of the competition.
* In the recent independently published DCIG 2012 Midrange Array Buyer's Guide, the replication software available on IceWEB Unified Storage Appliances line earned the distinction of "Best in Class" in the replication software category.
Notably, the independent analyst report named it the #1 Midrange Array: Midrange Array Replication Software Special Report: The Five Forces Driving Demand for Replication Software and How They will Influence Enterprise Midrange Array Buying Decisions, published by DCIG, an industry expert analyst firm.
If you wish a copy of the entire DCIG report in pdf format, email me at Dr.Faessel@onthemar.com
The features on the IceWEB Unified Storage Appliances (2000, 3000, 6000 and 7000) reflect how today's midrange arrays need to be architected to accommodate these new demands. Their #1 ranking in the replication software category shows that IceWEB is currently better positioned than its competitors to meet this specific, mission-critical need of organizations.
I envision that the new premier ranking just received by (OTCPK:IWEB) from DCIG to further drive sales; and with the prestige of the award major players will now feel comfortable in the use of (OTCPK:IWEB)'s product line to manage their storage resources.
A word about market size; it's simply gargantuan. Fueled by massive data growth driven by video on smart phones and other mobile devices IDC estimates revenue for the worldwide storage services market will approach $40 billion in 2012; year over year it's growing at over 10%.
(OTCPK:IWEB)'s Quarterly Highlights and Recent Developments
· Revenue increased 12% year-over-year.
· Revenue increased 362% in successive quarters.
· Operating expenses decreased 50% for the quarter compared to same quarter in FY 2011.
· Loss from operations decreased 61% in Q1 2012 vs. Q1 2011 and 73% less in successive quarters.
John R. Signorello, Chairman and CEO of (OTCPK:IWEB), stated in the just released 10-Q for Q1 2012: "In the first quarter, 2012, we dramatically streamlined operations by standardizing our offerings into four discrete, market-driven products, reducing operating expenses by more than 50%, while still increasing revenues and reducing the Company's operating loss by 61%."
The entire line of IceWEB unified data storage appliances are continuing to gain traction in the channel among mid-sized organizations for the following reasons:
1. IceWEB's licensing model of the IceSTORM™ operating system for managing a robust feature set that mid-sized organizations need to realize the benefits of cloud computing and virtualization.
2. Unparalleled performance metrics with over 71,000 IOps.
3. Channel partners are rapidly adopting IceWEB's storage solutions as an affordable alternative to EMC and NetApp.
4. A price point that's consistently 30% lower than the high cost vendors such as EMC and NetApp.
IceWEB has $787,000 in cash, and money from exercised warrants will soon begin to flow. With a market-cap of only $26 million this story, in my opinion, has home run potential and is one to jump on.
Storage sector M&A activity boils at big revenue multiples
Looming in the background and favoring (OTCPK:IWEB) is the booming M&A activity in the storage industry. Acquisition multiples are running from 7 to 10 X revenue. Rumors of a Fusion-io (NYSE:FIO) take- out by Intel (NASDAQ:INTC) fired a 13% jump in (FIO) shares two-weeks ago. (FIO) shares trade at over 8 X revenues (their biggest customer is Facebook).
In addition, on Friday Dell (DELL) announced it acquired AppAssure, Software Inc. (a private company) to expand their storage portfolio. AppAssure's leading backup solutions that seamlessly move and replicate data across their existing platforms enhance Dell's existing storage capabilities.
The trend over the last 4-years has been when the big companies validate the advancement in technology and software of the smaller companies the big guys follow with original equipment manufacturing licensing agreements and buyouts. When revenues ramp quickly in these small co's the larger companies look to acquire them as the recent and numerous deals by Dell, HP, IBM, Oracle, NTAP, EMC and Intel attest.
The eventual exit-strategy for (OTCPK:IWEB) will be a takeout by a major... Bet on it!
Especially of Note: On Balance Volume* is saying, "Buy me!" Please check the charts. If you require the graphic picture on the charts please send me a request to. Dr.Faessel@onthemar.com
The chart of On Balance Volume Note shows the long erosion in "price" and the sustained move higher and breakout in On Balance Volume indicating accumulation.
· Bullish divergence between OBV and price warns of market bottoms.
It's a classic accumulation picture... Also consider the strong move higher off the year-end tax selling lows on a large increase in volume...
* On Balance Volume attempts to measure the level of accumulation or distribution by comparing volume to price movements. Volume is added to the indicator if closing price moves up and subtracted if closing price moves down. No adjustment is made if closing price is unchanged.
The On Balance Volume [OBV] indicator was developed by Joseph Granville and is explained in his book Granville's New Strategy of Daily Stock Market Timing for Maximum Profit.
More on this exceptional investment in further reports.
Incorporated in 1994, (OTCPK:IWEB) was twice named Inc. Magazine's 500 Fastest Growing private US corporations and was recognized as Deloitte & Touche Technology "Fast 500" North American public or private technology companies.