Contributor Since 2010
Dr. John L. Faessel is a seasoned and respected Wall Street professional with industry-wide recognition for expertise in market strategy and analysis. He is widely recognized for his insights in public companies. For over 25-years Dr. Faessel’s ON THE MARKET reports have been widely distributed to a throughout the world to an extensive list of financial institutions, investment banking firms, brokers, foundations, mutual funds, hedge funds and private high net worth investors.
Dr. John L. Faessel
ON THE MARKET
Commentary and Insights
On Friday John R. Signorello, IceWEB Chairman and CEO, suddenly passed away. The press release said that he died in the morning from a genetic heart condition in his home. He was 45.
I heard about Mr. Signorello's sudden death in the afternoon West Coast time after the close of trading and of course was shocked, as I'm sure everyone was. I had spoken with Signorello several times over the past few months, had exchanged numerous e-mails with him, and we had grown to be friends. He seemed always to be enthused about things in general, especially IceWEB and its progress. He was one of those guys with a great attitude-he was so upbeat, seemed like he was always having fun.
He was a very special person and his family is in my thoughts and prayers during this difficult time.
How strange the fates are. On the day following what would seem to me to be the company's finest hour, i.e. winning the Storage Hardware Product of the Year Award over the industry's behemoths, the CEO who orchestrated the ascendance of the technology suddenly dies. Certainly he will not be forgotten.
I should mention that as I was watching the market in the afternoon I saw the IceWEB shares plummet from near $0.17 to $0.12 in just a few minutes on a huge volume spike. Obviously someone had found out about the sad news and sold a lot of stock. The stock stabilized at about $0.125, then in the last 30 minutes actually advanced on about 1.2 million shares of buying and closed at $0.134.
To maintain continuous operations, the Board of Directors named Mr. Harold Compton as Chairman of the Board and interim CEO of IceWEB Storage Corporation. The Board has also named Mr. Mark Lucky as IceWEB's interim Chief Operating Officer, effective immediately. Mr. Lucky has served as IceWEB's Chief Financial Officer for more than six years. See press release here.
In my opinion, interim CEO Harold Compton's background and experience as the lead Director on IceWEB's Board (since 2005) and as the former CEO of CompUSA ― in addition to the solid management team Signorello put in place; Steven Toole*, Chief Marketing Officer; Guarang Mehta, Chief Technology Officer (from LeftHand Networks - an HP acquisition); and Mark Lucky, Chief Financial Officer (for more than six years) is a strong management team that's "in place" now and will be well prepared for the astonishing transformative events that are to a degree already underway. The tragic and unfortunate reason for the sell-off in the market late Friday is an opportunity to acquire shares on the cheap I believe.
The following ON THE MARKET report was written prior to hearing of Mr. Signorello's passing and it's somewhat boisterous and 'high-fiveing', highlighting the importance of "their" big win. I've decided to leave it intact despite the very sad news.
"You ain't heard nothin' yet"
IceWEB Inc. (OTCPK:IWEB) OTCBB
Way, way back when, the line "You ain't heard nothin' yet" changed the world. The declaration was made by Al Jolson in the first talking movie, The Jazz Singer, in 1927. Nowadays it is difficult to imagine how dumbstruck and amazed the audience was when it heard the synchronized words come from the screen, but it was a seminal event heralding the demise of 'silents' and introduced the soundtrack to motion pictures. Those first spoken words-"Wait a minute, wait a minute, you ain't heard nothin' yet"-turned the audience into a "milling, battling, mob," in one journalist's description, chanting "Jolson, Jolson, Jolson!" Talkies were born, revolutionizing the motion picture industry.
Now, slash forward to IceWEB Inc. (IWEB). On Thursday, "tiny" (IWEB) announced that it has won the Storage Hardware Product of the Year Award. Now, maybe minuscule IceWEB isn't the equivalent of hearing Al Jolson (or anyone) talk and sing for the first time on film, but this disruptive story does mark a sea change, a pivotal event that's stunned the data storage industry. Imagine: with this hard to believe win a micro-cap blows away the huge established legacy players.
Contemplate this: (IWEB)'s market-cap is an infinitesimal $29 million. (IBM)'s is $226 billion, (EMC)'s $50 billion, Hewlett-Packard (HP)'s $43 billion, (DELL)'s $21billion, and NetApp (NTAP)'s is $10 billion. A flea bests the monsters of the midway. How can this be? Not since David slew Goliath... well OK, but how about no name, coming from nowhere Jeremy Lin besting Kobe Bryant in the NBA? (IWEB) is nearly 7,800 times smaller than IBM. Anyway, you get my drift.
And lest one be thinking 'rigged jury', the finalists in the competitive selection process won by (IWEB) were voted on by the IT community in a strict voting process limited to businesses with knowledge and familiarity of the data storage industry. See the release: http://www.iceweb.com/press-releases/iceweb-wins-datacentre-award/
The win isn't the first wipe out of the big players that (IWEB)'s new breakthrough technology has put on the score board: (IWEB) won the #1 ranking in the DCIG 2012 Midrange Array Buyer's Guide (a win over EMC, NetApp, IBM, HP, et al.).
Now grasp this!
The (IWEB) product mix sells at a fraction of the cost of the competition, at a price point that is consistently 30% lower than the high cost vendors such as EMC and NetApp.
(OTCPK:IWEB) includes an "all inclusive feature set" - you buy [it] you get all their cool features... unlike any vendors that I know of in this space...
Steven Toole, Chief Marketing Officer at IceWEB, said of the win: "An undisputable string of industry expert reviews has now been echoed by the data storage user community at large, choosing IceWEB among all others as the DataCentre Storage Product of the Year."
Here's what I like to call the elevator version of the story: (IWEB) has built an award-winning family of high performance data storage array products with enterprise-class features and performance capabilities that are sold at a fraction of the price of traditional providers. Exceptional new management and marketing hires also have brought added quality and dynamism to the storyline. Revenue is jumping. And now the market is discovering it and new orders are pouring in, as the recent press releases demonstrate.
Let's not leave out the colossal backdrop of a 61.4% CAGR data storage explosion. Never before has an industry as big as data-storage grown as fast as this sector is growing, and looks to grow. Data is everywhere, increasing by astronomic, nearly incomprehensible measures, and it's stored somewhere, needing to be tracked, backed up, retrievable, always on call. And micro-cap (IWEB) has the best and least expensive product. Truly astonishing!
I said in my last repot on (OTCPK:IWEB);
"Turnarounds have to start somewhere - and (OTCPK:IWEB)'s is now officially underway…"
(IWEB) has an unbeatable sales offering that a growing list of premier customers have selected, which speaks to the quality of its product line and all-inclusive service: the U.S. Army, The Department of Defense, the US Geological Survey, as well as multiple local and county governments, plus Google and Cisco… A steady stream of sizeable orders from mid-to-large commercial and public sector customers have selected (OTCPK:IWEB)'s products. Last month, (OTCPK:IWEB) announced that one of the world's largest electronics manufacturers, a Global 50' Enterprise Corporation, has purchased a high performance IceWEB 7000 data storage system to upgrade its supercomputing environment.
Tobin Smith of NBT Equities Research said recently re (IWEB):
"Bottom-line...with the new distribution deals IceWeb has recently put in place...with the new deal they have with one of the hottest cloud technology companies on the planet - Fusion-io (FIO), with new deals coming with ALL the major petabyte-a-day storage creators and private datacenters (the Amazons, Facebooks, AOLs, Verizons of the world) Ice Web is almost magically in the right place with the exactly right product at the right time."
I agree! And if I am right in my analysis just the name of one (and I believe there are more than one) of these premier players who have mammoth data storage needs that are beta testing (OTCPK:IWEB)'s products would ignite a fury of buying in the shares.
Also from Tobin:
"The fact that there is feeding frenzy of buy-outs in this space makes IceWeb and its lowest cost/highest performance open source storage software/hardware solution a prime take out play-in our mind the only question is, WHEN not IF."
(IWEB) will be an acquisition target in my opinion.
There have been over $4 billion in merger and acquisition deals inked in the data storage hardware and software space in the last few years. The trend 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.
These acquisitions have been priced at exceptionally high multiples of revenue, some as high as 6 to 8 X revenue; this makes the IceWeb shares even more compelling.
Just some of the recent $4billion 'plus' in deals:
· EMC buys XtremIO for $450 million.
· Oracle buys Pillar for $500 million+
· NetApp buys Engenio for $480 million
· Dell buys AppAsure for undisclosed $
· Dell buys Compellent for $960 million
· Dell buys Equillogix for $1.4 billion
· HP buys LeftHand for $360 million.
I agree "in spades" with Tobin: (IWEB) is a sure shot acquisition target!
* Another important reason for (IWEB)'s order surge; a recent hire brings a great deal to the table. Steven Toole, now (IWEB)'s relatively new Chief Marketing Officer was instrumental in driving sales for AppAssure. (Acquired by (DELL) in February.) AppAssure reported 194% sales growth year-over-year in 2011 and 19 consecutive quarters of growth. Toole has said that he sees "at least the same potential growth at (IWEB)", and he came to the company to repeat the impact he made at AppAssure. Toole also says the, "market that's far bigger than AppAssure's a market for Windows-only backup software." The "sell" is easier too as companies only buy backup once every five or so years, contrasted with (IWEB)'s market opportunity for storage that is not only 10x larger than the backup software market, but is growing at a much faster pace.
Prominently, much of Steven Toole's sales force at (IWEB) came over from AppAssure with Toole.
I call (IWEB) my "Turnaround Stock of the Year" and I see fat multi-bag potential for the shares of this little company.
Visit (IWEB)'s exceptional website: http://www.iceweb.com