DIABLO INVESTMENT GROUP-> Hyperdynamics Corporation (OTC BB: HYPD) diabloinvestmentgroup.com
Download a copy of this report (.doc format)
EQUITY PROFILE August 14, 2001
Hyperdynamics Corporation (OTC BB: HYPD)
Shares Outstanding: 14.3 Million Est. Public Float: 6.0 Million Market Cap: $14.6 Million
Revenues
RPS
P/R
Earnings
EPS
P/E
HYPD
2000-A
$2.138M
$0.15
6.8
($0.6M)
($0.04)
NA
2001-E
$0.6M
$0.04
25.5
($1.5M)
($0.10)
NA
2002-E
$11.2M
$0.80
1.275
$1.3M
$0.09
11.3
2003-E
$25.5M
$1.82
0.56
$2.9M
$0.20
5.1
INVESTMENT HIGHLIGHTS
Hyperdynamics Corporation is a premier provider of comprehensive integrated technology services (ITSP) and solutions for a client base in the rapidly growing ITSP marketplace for small-to-medium sized businesses. The Company is capable of handling a wide range of its clients' unique ITSP needs, with services ranging from conventional IT services to enterprise migration and comprehensive IT HyperSource solutions (outsourcing all of a client's e-business needs). Hyperdynamics Corporation has positioned its future business strategy around the development of uniquely designed Integrated Technology Centers (ITCs), which will offer client companies comprehensive bundled ITSP services and solutions integrated with its state of the art facilities. The first Houston based ITC has recently begun operations, and is offering its clients a full and expansive range of outsourced IT and back-office services. The Company's first ITC is designed around an AT&T Dedicated Entrance Facility with on-net redundant fiber provisioning offering scalable bandwidth up to an OC-48 and beyond. This comprehensive Tier-1 hosting center enables the Company to offer clients complete end-to-end IT services in a fully redundant and seamless environment. Through recently developed Hyperserve connection products, Hyperdynamics has been able to improve the functionality of its services by offering clients remote server appliances that connect to the ITC. Bolstered by strategic alliances and strong working relationships with major players in technology and telecommunications, including Microsoft, Intel, AT&T, and Great Plains, the Company has demonstrated a superior ability to cater to the unique needs and limitations of small-to-medium sized businesses, effectively creating a business model that partners Hyperdynamics' success with that of its clients. Utilizing this innovative approach, Hyperdynamics will be able to grow its business in conjunction with client business growth, and position itself as the ITSP provider of choice for an emerging market of small and mid sized companies. Within the Houston region, and with this small and mid sized target market, the Company is well positioned to grow its business substantially over the near to intermediate term and achieve niche market dominance within an appreciable time period.
The Company has recently aimed its full-service IT hosting business model towards the unique needs and growth strategies of small to medium-sized businesses, a rapidly growing market that is relatively undeserved by major IT service providers such as Exodus, Level 3, UUNet, and Sprint. The Company has based this approach around the potentially lucrative, long-term revenue streams afforded through association with growing companies. For example, the Company has recently initiated long-term Hypersource IT hosting arrangements with Eagle Wireless International and Premiere Media Group. Eagle Wireless is a leading supplier of broadband wired and wireless equipment and services for a variety of markets, including the Internet, digital set-top boxes, and wireless convergence products, and is anticipated to reach national market penetration within the next several years. As the client company grows its business over the next several years, the highly scalable nature of the Hyperdynamics' IT hosting model will enable the Company to offer additional needed services readily while retaining high margins. By being able to refine and scale up client IT services in a quick time period, and for minimal additional expenses, the Company has opened up access to significant and recurring long-term revenue streams from smaller and mid-sized business clients. Moreover, Hyperdynamics offers client companies an unprecedented degree of personalized attention and customization, when compared to major national ITSP providers.
The infrastructure of its first ITC, designed to support end-to-end ITSP services can also be leveraged for easy and smart diversification. With its recent acquisition of Seacon Computer Systems, Inc. (SCS), the Company has been able to enter the vertical seismic data management market. Thus, in addition to its horizontal industry approach for ITSP services, new and innovative vertically oriented business opportunities offering diversified revenue streams are coming to the Company. For example, SCS is a seismic data management company that has developed a unique and cost saving method for transferring seismic and geologic data for oil and gas companies on 8mm and 9mm magnetic tapes to state of the art DVD (optical) storage. The current methods of storing this type of data on magnetic tapes are time consuming, prohibitively expensive, outdated (the technology is over 40 years old), and inefficient. SCS will enable clients in the expanding oil and gas industry to migrate the estimated 3 billion magnetic tapes that degrade in 8-20 years to DVD storage, with an expected lifespan of over 50 years, at a cheaper price point and with easy accessibility. The SCS acquisition, moreover, provides an ideal strategic fit to the core data center business of the Company, and opens up significant and highly lucrative revenue streams. SCS will derive revenues from three principal sources: (1) conversion of existing tapes to superior DVD storage technologies; (2) accessing DVD data through the Hyperdynamics ITC facility; and (3) a vertical ASP approach to remote seismic interpretation processing of data through the Houston ITC using technical and hardware support from Intel. In addition to opening up an innovative and new business through the SCS acquisition, the Company believes that it will be able to apply this type of vertical ASP approach towards other target industries, such as insurance services, either through additional acquisitions or joint ventures. |
