B) Is ACCD ready for war?
Rated A Buy
Reason for DD
Forward earnings and Greg keeps saying it is good
Business
Accord Networks Ltd. develops, manufactures, and distributes an advanced networking system that enables real-time interactive visual communications. The Company's MGC-100 system allows multiple parties to engage in visual communications across and between different types of networks, transmission protocols and endpoints. The MGC-100 system allows users to connect to broadband and narrowband, circuit-switched and packet-based networks. The system supports endpoints utilizing Internet protocol, asynchronous transfer mode, and integrated service digital network.
Our MGC-100 system provides: . Multiple network connectivity--the ability to seamlessly connect existing circuit switched networks with emerging packet-based and broadband networks, along with a design capability that allows for connections with new networks and standards as they are developed; . Comprehensive transcoding--ensures communication among endpoints with different video, audio and data parameters and bandwidth capabilities, allowing for optimal performance at each endpoint; . Continuous presence--allows participants to simultaneously view multiple sites on a single screen in six different visual image layouts which can be changed at any time throughout a visual communications session; . Easy-to-use interface--allows simplified and more reliable visual communications session set up, control, troubleshooting and billing, which can be managed remotely over the Internet or by telephone; and . Video and audio processing and data routing--allows participants in multiple locations to see, hear and share
information with one another as if they were all physically in the same room.
ACT Teleconferencing* MCI WorldCom* British Telecom* NTT Phoenix Deutsche Telekom* PictureTel* France Telecom* PQ Networks* Geoconference* South Africa PTT Global Access* Sprint Communications* Global Crossing* V-Span* Inview* Video Web* Korea Telecom VirtuaLINK* 1-800 Video On* BHF Bank Lockheed Martin* Credit Suisse First Boston Microsoft* Donaldson, Lufkin & Jenrette Nortel Networks* Goldman Sachs Raytheon* Halaba Bank United Bank of Switzerland* Holland & Knight World Bank are customers
Deutsche Telekom AG uses our MGC-100 system to offer real-time interactive visual communications services to its customers. Deutsche Telekom also uses our system for internal visual communications, such as business meetings, training and distance learning. Deutsche Telekom benefits from the transcoding capabilities of our system, which allow easy set-up of sessions between endpoints that are using different systems and speeds. Another important benefit to Deutsche Telekom is the ability of our system to connect to different network types, such as ISDN, ATM and IP, all within a single platform.
Competitors
Our principal competitors include VideoServer, now known as Ezenia!, Lucent, RADVision and CUseeMe Networks, Inc. We believe that none of these competitors individually are dominant in the market. We believe that the features, functionality and technology in our system gives us a competitive advantage in this market. However, we expect that competition for systems and products that enable real-time interactive visual communications will grow as more companies focus on this market and begin to develop applications and networking solutions.
News
Accord Networks Announces Record Revenues for Q2 2000
ATLANTA, Aug 7, 2000 (BUSINESS WIRE) --
_ Strong results reflect leadership position in the
_ visual and voice communications networking market
Accord Networks Ltd. (Nasdaq: ACCD chart, msgs), a leading manufacturer and distributor of an advanced product line of network switches, gateways and management systems for real-time, point-to-point and multipoint IP, ATM, and ISDN visual and voice communications, today announced record revenues and reiterated major events that occurred during the second quarter ending June 30, 2000. These events include a successful initial public offering, settlement of a patent litigation lawsuit, and the introduction of new products.
The revenues for the second quarter ending June 30, 2000 were $9.6 million. Revenues increased 73% over the second quarter 1999 revenues of $5.5 million and increased 16% over the first quarter 2000 revenues of $8.3 million. Of the revenues earned in the second quarter of 2000, 82% was earned from sales in North America and 18% was earned from sales in the rest of the world, as compared to 68% from North America and 32% from the rest of the world during the first quarter of 2000. Operating income increased from $193,000 in the second quarter of 1999 to Pro Forma operating income of $420,000 in the second quarter of 2000, a 118% increase. Pro Forma net income for the second quarter of 2000 was $389,000 compared to net income $177,000 in the same period last year. Pro Forma diluted earnings per share for the quarter were $.02 doubling analysts' mean estimate of $.01, according to First Call. The Pro Forma results exclude a one-time charge of $6.5 million for the settlement of a patent infringement lawsuit.
According to Jules L. DeVigne, Chairman and CEO of Accord Networks, "We are very pleased with the results of our first quarter as a public company, reflecting our strong leadership position in our market. Our revenues are being driven by increased demand for the MGC family of Internet-Protocol (IP), ATM, and ISDN visual and voice communications products. Our revenue is being generated through several types of customers including the service provider market -- ISPs, ASPs, IXCs, RBOCs, and CLECs -- as well as enterprise organizations, educational and medical institutions and government agencies. We are also pleased with the breadth and depth of our reseller and OEM partners."
During this quarter, Accord(R) Networks realized successes in several areas of the business. The Company significantly expanded its domestic and international customer list to include China Telecom, NTT, BBCOM, Abovenet, Boeing and MARs Corporation. Accord also added VTEL to a growing list of endpoint manufacturers that resell the Accord MGC family of products. VTEL joins other leading companies including PictureTel, Sony, TANDBERG and VCON.
This quarter, Accord(R) Networks also began shipping the MGC-50(TM), a work group solution and small enterprise solution for real-time visual and voice applications over IP networks. It can be deployed as a standalone or distributed product and brings to the market an unprecedented level of functionality at an entry-level price. It is an ideal product for customer sites requiring pure IP voice and visual communications because it is the only IP product that offers high-end communications features such as full transcoding capabilities. As with the MGC-100(TM), the MGC-50 can be configured as a gateway to handle the real-time voice and video communications across diverse networks.
In November 1998, VideoServer, Inc., now known as Ezenia! Inc., began a lawsuit in the United States District Court, District of Massachusetts, alleging that our U.S. subsidiary, Accord Networks, Inc., had infringed and was willfully and deliberately infringing on a patent. The plaintiff subsequently amended its complaint to allege that our subsidiary also had infringed and was willfully and deliberately infringing on other patents. In June 1999, we were added as a defendant in the lawsuit.
Analysts and Other
08:15am EDT 8-Aug-00 Dain Rauscher Wessels (DRW Research Department) DRWS ACCD
DRW Research Summary - Tuesday, August 8, 2000 Part 3
ACCORD DELIVERS STRONG SECOND QUARTER RESULTS
* Accord reported revenue of $9.6 million and as-reported EPS of $0.02.
* Accord announced new customer wins across its portfolio of clients.
* Inventory level was unusually high this quarter; however, we believe it will normalize as Accord implements mechanisms to manage its inventory.
* We are increasing our 2000 and 2001 revenue and EPS estimates.
* We continue to rate ACCD shares Strong Buy-Aggressive with a $20 price target.
08-Aug-00 13:00 -- 14:00 ET
Accord Networks (ACCD) 8 13/16 -13/16: CIBC Wrld Mkts reiterates STRONG BUY rating and price target of $30; expects revenue growth going forward to be driven increasingly by IP-based visual applications as buildout of IP-based Internet infrastructure continues and quality of service performance steadily improves
25-Jul-00 15:00 -- 16:00 ET
Accord Networks (ACCD) 11 1/4 +1/2: CIBC Wrld Mkts initiates coverage with a STRONG BUY rating and price target of $30; expects revenue growth going forward to be increasingly driven by IP-based visual applications as the buildout of IP-based Internet infrastructure continues and quality of service performance steadily improves; CIBC Wrld Mkts participated in underwriting the recent IPO.
24-Jul-00 14:00 -- 15:00 ET
Accord Networks (ACCD) 11 -1 11/16: Dain Rauscher Wessels initiates coverage with a STRONG BUY AGGRESS rating and price target of $20; firm participated in underwriting the recent IPO; says rapid decline in price of visual endpoints, increasing use of PCs for interactive video, and the adoption of H.323-based VoIP make this technology affordable and economical.
30-Jun-00 13:09 ET
Accord Networks (ACCD) 9 1/8 +3/16 (+2%): Speculators making their way back into one of yesterday's IPO duds. The 5 mln share deal, led by CIBC World Markets, came to market at $11... ACCD is a manufacturer of networking systems that enable real-time interactive visual communications.
Numbers
Revs 6.5M to 7.9M to 8.3M to 9.6M Jun00
1997 - 1,578M, EPS (3.92)
1998 - 12,597M EPS (0.77)
1999 - 24,835M EPS 0.02
EPS 0.1 to 0.2 Jun00
0.04 SEP 00 is est
52-Week Low on 28-July-2000 $7.281
Recent Price $10.063
52-Week High on 21-July-2000 $13.25
Market Capitalization $206.6M
Shares Outstanding 20.5M
Float 5.00M
Price/Book (mrq) 3.62
Price/Earnings N/A
Price/Sales (ttm) 4.03
Insiders
5.1% institutional up from 0 the quarter before
Lockup not over so no sells.
Internet Posts of Note
This stock is also tied closely with tele-communications stocks.NAZ drops, telecommunication stocks drop, it takes a big hit 9/1/00 on Yahoo
I beleive ACCD is a safe place to park some of that money before you split Kevin. Just a head's up. I figure at 171 million dollars, you can probably turn your back on it...even in a down market. I don't think you will make money on it today, but then, you're leaving right? 8/18/00 on SI
1.I was not on the road show. If it was successful the stocks would not be wallowing at 8. They are well undervalue. Smaller day traders gobbled up most of the shares.
2. It took place during the suit and it was realized that it was holding the company back. It was then settled.In my opinion there was a lack of experience in this area that contributed. I also think they came out to early.
3. that is what will bring the stocks up in my opinion. The larger brokage firms taking another look. They need to work on there investment relations and get the job done 8/14/00 on yahoo
Did anyone notice this year's eps wnet to .12 from .07 and next year went to .32 from .24. These are 70 and a little over 30 percent increases although they don't seem like alot. this translates into a PE multiple f about 25. Even more compelling is the fact that the company is growing at about 75% which puts it's PE/G at around .30. That is very cheap for a company with leading technology in a fast growing area especially when you compare them to their closest competitor in RVSN which trades for about 4x ACCD when you compare revenues. I also don't believe the analysts know just how big the new deals really are since they couldn't disclose the details. All they said on the call was that NTT has one of the largest IP networks in the world. That sounds like a pretty good oppurtunity to me. I also think all of the people who wanted to sell or were looking for the quick buck are gone and we will start to see some investors coming in looking for a good oppurtunity to get in on the ground floor in a fsat growing company with profits and a good balance sheet and a great list of customers. Good luck to all. Just my .02 8/11/00 on yahoo
Everyone knows DeVigne was at VideoServer (now EZEN) from 92 - 97 as well as Keenan (94 - 98). Look at this chart to see what they did over there. You really picked a good one here, hyperdan, latt_2001, oldmanandthesea,
placeware_2001 or whatever you call yourself. Check out management's performance at VideoServer/EZEN on this 5 year chart ($40's down to under $10). Here's the chart
finance.yahoo.com 8/10/00 on yahoo
I really like ACCD, listened to Conference Call, and liked it some more. I am holding my shares, will not scalp here. I think upside is much greater than downside. 8/9/00 on SI
i dont know how much you follow this stock but coverage will increase shortly. the pay off to EZENIA(videoserver) was blown out of proportion as it was based on all of the main staff at videoserver leaving the sinking ship. So the remaining management had to make it painful for them (sore losers) evryone i used to know there has left and say that accord is going to dominate this area. just to talk to any sales rep at MADGE EQUANT SITA SONY POLYCOM VCON TANDBERG RADVISION(HEHE) etc...... 8/9/00 on yahoo
RADVISION has been hyping that they sell IP only (note: they can't offer visual networking equipment over ISDN, like ACCD), but this is no big deal because ACCD's MGC-100-50 can be configured for IP only. Also can attract service providers using traditional networking systems.
Win rate against RVSN, ACCD won some/RVSN won some: looks like neck to neck in the races
FUND MANAGER PRESENT WITH QUESTION
Herbert of Herbert Capital Manangement..notes revenue very strong, asks why.
ACCD positive about more opportunities in China & Japan 8/7/00 on Yahoo
I work for Verizon, we just installed 10 units for the network services division, and the product rocks. The company is trying to cut travel costs, and they they are encouraging having meeting over the net. THe network division will be a strong influencer in Accord products all over the company. Trust me, this is the way to go. Earnings will be great !!! 8/7/00 on yahoo
Did some dd last night, burn rate is big as well. I got some SONE at 18 1/2, ACCD looks coiled just needs a few more buys. It moves quickly due to 5 million float. 8/1/00 on SI
CC Notes Q2 8/7/00
- Raised 50M through 50%
- 73% growth
- Settled patent infingement suit
- Increasing market share every quarter
- 12th quarter of increasing sales growth
- North America 82% of rev. Was 65% last quarter.
- Believe sales will grow in all markets
- One customer was 10% of sales
- 50% of products shipped have IP (Internet Protocol) capability
- 76% gross margin, 9th quarter in row over 75% for gross margin
- 6.5M to settle lawsuit
- 190 headcount vs. 180 at q1 and 118 y ago
- 389K net income or 0.02 EPS
- 3.2M of cash and got 51M from IPO
- No debt
- 6.4M in inventory due increase of units on consign, lack of focus on inventory management, and stockpiling of components
- looking for VP of operations
- Q&A
- Rob Goldman – US bancorp
- NTT was impressed with our system, expect to add the IP capability later on
- % of sales through resellers will continue to grow
- Mark Tyconin – CIBC
- Linearity was good in the quarter and don’t expect it change
- Expect fewer pure ISDN systems ordered, IP becoming popular
- Some service providers are acting as resellers and vice versa.
- ASPs were stable in the quarter
- I think international will come up since 2q was an aberation
- Another analyst
- Inventory should only be 4 or 5 turns a year
- Our product can be configured for IP only. Radvision is only IP only. Not as diversify. We win against Radvision. They have a lower entry point than us.
- Robert Herwig – Herwig Capital Management
- 70/30 split is expected NA/international
- Was on an extended trip in asia visiting many customers in China and Japan
Chart
On an uptrend since $8 low in July.
Links
www.accordnetworks.com
Summary
Lawsuit had bad timing and IPO during the time when no one wanted the IPOs hurt too. I really can’t find a negative with the company. Company has 3 year history. Very little DD on the message boards. Makes me wonder if anyone reads prospectuses. Downside is $8, upside is $20. I’ll buy Tuesday.
Jack |
