By comparison to PSFT, SEBL and LHSG, GCTI is relatively cheap. Remember that these are all leaders of fast growing areas, aka gorillas. But GCTI has to perform on that level to earn a 10X revenue valuation. Otherwise, the company falls like Remedy, Clarify and Ascend. GCTI is doing a great job of signing up implementation and reseller partners. How many companies do you see sign agreements with MCI and IBM on back to back days? They appear to be both a marketing and technology machine. To me, they seems positioned like Siebel was in early 97.
I am reasonable sure that noone will knock off GCTI. My biggest concern is whether the CTI market will grow enough for GCTI to sustain 75%+ growth over the next 2 to 3 years and 50% growth for several years after that. That is the required formula for a 10X revenue valuation in my book. I guess my concern here is that there are only a finite number of call centers in the world. Fortunately GCTI's success will help push the market. Another risk is they simply self destruct with poor management. But given the mgt they have brought on board in the last 18 months, I doubt this.
The other consideration here is risk/reward and I wish it were a little more favorable. If GCTI takes it in the shins, the stock will see the teens, let's say 16 for discussion sake. That's 50% downside. On the other hand, if they continue to exceed increasing estimates, the company gets a 1.3 bb market cap at year end 98. This is roughly $42 to $45, although more upside is possible if they blow away the number. (Remember that last qtr, GCTI seem to be very conservative in their rev recognition and could have probably blown estimates away.) This analysis means that we could lose half of our investment or get a 50% gain from the current stock price within the next 9 months. I typically like to see the potential for doubling my money within a year with this kind of risk. The nice thing with a beast like this is the stock can maintain a 10X valuation for several years and thusly earn 50% or more per year.
With respect to your question regarding LHS, GCTI does not participate in this area at all. What GCTI is attempting to do is create a de facto piece of technology infrastructure that links the customer to enterprise at key point of customer touch including telephony, the internet, customer service reps and CIS data. They are pushing the model to transcend the current model of CTI software.
I hope this is somewhat helpful. |
