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AINN |
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Hello -
I'm wondering if anyone is actively tracking AINN (Applied Innovation). They hold 30% of the market for network mediation systems.
What are network mediation systems?, you might ask. They are hardware and software components which, you guessed it, "mediate" between older and newer forms of hardware on networks. Specifically, AINN focuses on network mediation systems for telephone systems (most of their clients are Regional Bell Operating Companies [RBOC's]).
In brief, telephone companies are adding new pieces of hardware to their systems to allow for the expansion in the services they offer. This means that the new equipment has to function along with the older stuff they already have (and plan to keep for awhile :). AINN manufactures the hardware, and develops the software which allows the older equipment to work along-side the new.
My reasons for purchasing the stock were several. Last year the stock hit a high of around 30. It is currently trading at 12-1/4. The company is debt-free, and had seen steady revenue and profit growth until late last year. It has essentially remained flat at around 8 million in revenues/quarter since then. Their future revenues/quarter hinge on the availability of new contracts from the RBOC's, and perhaps some orders from non-RBOC companies. They do have some product upgrades in the pipeline and are spending approximately 1.5 million/quarter on R&D for atleast the next three quarters. Current PE is around 33, but remember this is a growth company in a niche market with 60% margins, so this PE is warranted.
I've gone through alot of documentation on AINN in the past few weeks, researching them heavily because of the possibility of upcoming contracts from Bell Atlantic. If anyone has some further insight into the network mediation market, or AINN itself, consider posting, so that we and others may share our points on view on this company.
- Thanks in advance
Osiris G. Martinez
geronimo@shadow.net
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