Jim Cramer preaches to buy broken stocks, not broken companies. Cramer may be typically referencing big board listed stocks, but the same adage can certainly hold true for small and micro-cap companies with proven leadership, revenue-generating offerings and a share price going through a dip. AltiGen Communications, Inc. (OTCQX:ATGN), a leading provider of integrated Microsoft (NASDAQ:MSFT)-based Unified Communications solutions who has recently done business with several major North American and European service providers, is actively penetrating Fortune 1000 companies with its new suite of applications for Microsoft’s UC solution, Lync Server 1010. As such, it is a company that falls right into the wheelhouse of Cramer’s proverb.
The History
AltiGen is not new to the communications industry. The company built its brand more than a decade ago when it married the best features of a personal computer with the best a telephone had to offer and set the telephony industry on its side with advancements. Because of its legacy systems as a leader in PBX technology, AltiGen has been ranked as one of the top ten Unified Communications vendors in the United States by both the Gartner Group and Nemertes.
Sensing an industry shift from outdated PBX systems ready to happen, AltiGen has migrated to software-based solutions to provide seamless integration of Microsoft infrastructure technologies to its more than 10,000 clients. This was a prophetic move by AltiGen to maintain its leadership position in the integrated communications space. Gartner’s recent findings in its 2011 report stated, “the unified communications portfolios have begun to mature with the emergence of integrated UC suites.” Once again, AltiGen was a step ahead of the curve by being the first independent software vendor to market with its latest portfolio of products.
Transition to Opportunity
The swing in business model produced a lag in news that appears to have dampened investor sentiment temporarily. The ATGN share price faded from its normal range around 80 cents and well-off its 2011 high of $1.23 as shares touched 20 cents in December of 2011. Resurgence in news this month has quickly pulled the value of an AltiGen share off of those lows with shares appreciating by more than 80 percent, but still below its normal trading range.
The news showed that AltiGen is back on the move and adding to its portfolio of more than 10,000 clients. The company is expanding its international footprint through new partnerships with the top Microsoft Unified Communications partners to deliver AltiGen’s MaxACD contact center solution for Microsoft Lync. A recent deal with Eurodata Systems Ltd, a leading provider to the UK’s public and private sector, has already netted an initial services contract with the Association of Accounting Technicians. Tool giant Milwaukee Electric Tool also joined the AltiGen client list with a new agreement which will feature AltiGen’s MaxACD system supporting 20 domestic service centers of Milwaukee Electric Tool.
A quick look at the company’s recent report on operational results from the first fiscal quarter of 2012 shows several important facts. Revenue increased to $4.8 million from $4.3 million in the final quarter of fiscal 2011 and net loss contracted from $861,000 in Q4 2011 to only $9,000 in Q1 2012. It looks like AltiGen is turning the corner and starting to gain better industry traction with their Microsoft Lync technologies.
It also cannot be overlooked that Form 4 filings show that in December AltiGen chief Jerry Fleming bought approximately 100,000 shares between 62 and 80 cents.
Fodder for Thought – Management Has Been There, Done That
Modifying to meet the ever-changing demands of technology is a strongpoint for AltiGen execs. Chariman and founder Gilbert Hu was the founder of Centrum Communications, a pioneer in the remote networking industry, which was acquired by 3Com Corporation in 1994, which was later bought by Hewlett-Packard in 2010 for $2.7 billion.
President and CEO Jeremiah J. Fleming served as a member of the executive management team of Interactive Intelligence, Inc. (NASDAQ:ININ) during its launch of subsidiary Vonexus to focus on Microsoft-based IP communications solutions. Fleming was appointed as President of Vonexus and eventually promoted to senior executive roles at Interactive Intelligence when it went public. Shares have been trending up for nine years and still trade for nearly $30 each.
CFO Philip M. McDermott formerly was the VP of Finance, Operations and Administration for DAVID Systems, a division of Chipcom Corporation, a public networking company that was acquired by 3Com Corp. After the acquisition, McDermott served as Director of Finance for Americas Sales for 3Com before coming to AltiGen.
The list of AltiGen directors carries on the pattern of a long lineage of ties to major corporations in the industry that should prove beneficial as AltiGen continues to grow. And, they know a thing or two about mergers and acquisitions, to say the least.
AlitGen has a tiny float, tiny market cap and huge potential. The stock price may be broken at the moment, but the company looks to be getting stronger than ever.
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