Vertel's prospects: The best-kept secret
on Wall Street? Much of the research you
read -- the daily reports and morning calls
from the big investment banks -- is flawed.
Most Wall Street analysts are more
concerned with feeding their sales forces the
daily "buy" and "hold" mantra than they are
doing qualitative digging into the products
and executives of the companies they follow.
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.
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