SmartServ is way ahead in building the infrastructure for routing wireless transactions globally, something that neither Aether nor 724 Systems, which sell at many times SSOL's valuation, are doing.
The current state of the art requires a user to buy or preload a particular mobile device with software to transact with a particular brokerage or m-commerce provider, making it very difficult to reach multiple service providers from a given device and vice-versa. SmartServ's middleware allows multiple wireless device manufacturers to support transactions across multiple service providers via routing, maintaining audit trails and other industrial-strength features. With HP, SmartServ is building wireless transaction-routers in a dozen international financial centers, so SSOL device- and service independent transactions can soon span geographic boundaries.
The wireless sector had its initial speculative runup - AETH and SVNX are way down from their highs, and even so have high valuations in the billions. Still, if you look at the numbers, SSOL is trading very cheaply by almost any metric - in fact at $160M for several times its cash-on-hand of roughly $24M, which yields a low multiple for just this and its cash-cow, the royalty from their prior DTNIQ product (~4m/y?). Which leaves us with a value of near zero for the following:
- $20M HP commitment, plus co-marketing and engineering resources first "data center" i.e. transaction routing server now up in NYC
-$14M of private funding near roughly $50/share.
- customer Bank of New York now online paying for WASP service and $1/transaction
- Microsoft is a now customer; SmartServe will be getting $ per transaction for all MS Exchange Mobile transactions, as their middleware will be embedded in the MS server
- QPASS transactions. SmartServ just closed contract with qpass mobile wallet service and will take its toll for purchases of qpass.com New York Times, Wall St Journal, USAToday, Forbes, many other content sources.
- world class management in Alan Bozian, recent hire, rapidly expanding staff, adding offices in Europe.
-institutional ownership (although still small percentage) is increasing rapidly, data suggest few retail holders still exist.
- major analysts starting to follow, including Mark Roberts of First Union Securities, who invited SmartServ to present at the FUS conference on Nantucket this year (of course I attended)
This space has only a few public players and VC money is chasing new startups in this area aggressively. Basically, just about every SSOL rumor that has been posted on the RB board, from the impending NAS listing, hiring top mgmt talent, etc. etc. etc. has come true. So I agree they have delivered on the promises of building a business according to their model as stated, which is middleware and infrastructure -based. We know they can deliver product full-cycle as demonstrated with DTNIQ.
SmartServ is not so much building a product/service that people will buy as building a bridge over which they will cross, then collecting the toll. So the valuation question comes down to this: how many wireless transactions ("WT"), do you think QPASS, Bank of New York, MS Exchange Mobile, and a dozen financial servers globally (the HP ebackbone) will carry as people start using m-commerce? And how fast will that number WT grow sequentially? Multiply by 1 or 2 and you have an even-money valuation for the core of SmartServ's business. Multiply WT by whatever multiple is currently being used for the wireless sector (e.g. for AETH and SVNX currently 400 or so?) and you have a par sector valuation. Personally I think WT will easily be 100M within a year or so, and will grow much faster than the revs from Aether's or 724's model.
RECENT PRICE ACTION
SSOL has held up extremely well during several NAS selloffs, yet SSOL has come under attack by what appear to be organized bashers when SSOL refused to fall along with everything else. They use 2 tactics: 1 - post on Raging Bull (using aliases nealross, octoman, greatb, wbe, and others) - common lowbrow bashing tactics include outright slander and fabrications, also racist and ethnic attacks against other posters to try to scare retail holders into selling or not buying:
ragingbull.altavista.com
2- at the end of a weak NAS day, usually in the last 5 minutes, they will attempt to drive the price down to close at the low of the day, to break the chart. The key to seeing this pattern is the volume spike all in 5 minutes. People who are selling try to spread it out to get higher price, not focus all shares at once to drive price down. This is price manipulation, illegal. During an up-trendng market, these dips have proven to be excellent buying opportunities for me.
Disclosure - Over 7700 posts on RB; I am a full-time trader(focus on program/mechanical trading of QQQ/CSCO) and angel, SSOL is my only long-term stock holding for retirement and child's education fund, I'm accumulating at these levels and trying to spread facts to combat the hogwash.
MfN |
