Despite the fact that FTEL has been around for quite a while, based on their almost exclusive emphasis on Internet Telephony, I think they can be considered a technology leader "startup" company. Many analysts, including I believe Mike Murphy of CTSL newsletter, pay more attention to a different ratio, i.e. price/research and development (P/RD ?) rather than price/book (P/B) or price/sales (P/S) for such companies. Of course, it is not easy to quantify research & development considering factors such as patents, copyrights, propriatery algorithms, barriers to entry, exclusive relationships, quality of R&D, how close to real-life applications, etc. many of which are subjective concepts. However, if analyzed using the price/research and development ratio instead of P/B or P/S ratios, I believe FTEL would look a lot better, quite possibly justifying its current price and even more. I wouldn't be an FTEL investor if I did not think so.
The P/RD ratio should also explain why concentrating undue attention on the upcoming quarterly revenues or earnings is quite meaningless. I'd rather attempt to analyze and quantify FTEL's R&D and its potential to turn into dollars in the future.
Regards.
Sert |
