>>...Vertel's prospects: .........Analyst James Hale has discovered several small-cap gems, among them semiconductor maker Vari-L (VARL: news, msgs) last year, and just minutes ago, network software developer Vertel (VRTL: news, msgs).
Vertel Corp. shares have startled investors this week. The little-known California company has seen its Nasdaq shares rise 75 percent (by midday Friday) for the week, with millions of shares changing hands. Yet not a word about the company has surfaced from Wall Street investment banks. On Friday, Hale connected the rise in the company's stock in part to explosive gains in fiber-optics companies, those developers that are increasing the bandwidth of telecommunication lines through optical coating technologies.
Vertel's software lets "different kinds of telecom networks and systems" talk to one another," Hale says. The demand for so-called middleware companies that manage the flow of information through the world's fiber-optic lines is huge. Anything even remotely connected to the concept of broadband delivery of data, pretty pictures, words and sounds is hot these days, especially in the wake of giant media merger America Online Time Warner.
"Vertel's software is designed to facilitate the mediation process, for example, managing the exchange of voice, data or video from a fiber-optic backbone to a DSL (digital subscriber line) loop," Hale writes. Part of Vertel's good fortune this week comes from a new product. Something called e-ORB (Object Request Broker) "could make or break Vertel's emergence from small-cap obscurity," Hale says from his northern California office.
The new software is fast and small and helps mediate the convergence of voice, data and video traffic on a network. It works across computer operating systems such as Windows NT, Unix and Linux. "Furthermore, the software is extremely small so embedding it in devices such as wireless products is possible," Hale says. An early customer is Tellium, a major maker of optical switches.
Hale the other day (see the column) joked with me that fiber-optics should be part of every investor's diet.
Vertel's stock market worth (capitalization) is now north of $300 million, thanks to the stock's rise this week. "This is a classic case of a very high-risk, high-reward type of investment," says Hale. The company, after all, has just $18 million or so of yearly sales. Hale says an early profit this year could propel the stock, last at 13 1/2, far higher. If e-ORB stumbles out of the gate, all bets are off....<<
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