AsiaInfo Holdings: Under lock and IT

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AsiaInfo Holdings, Inc. (Nasdaq:ASIA)
Beijing, China
http://www.asiainfo.com

52-week low / high: $5.77 / $13.42
Shares outstanding: $45.15 million
Market capitalization: $582 million

With the Web’s far-reaching tendrils encompassing the globe, the probability of sensitive information being exposed to third parties is high. (Mostly) no one likes a voyeur, especially Chinese businesses. When times are compromised, AsiaInfo Holdings, Inc. (Nasdaq:ASIA) — a provider of IT security products and services and telecom software solutions to businesses big and small in China — is there to satisfy security needs.

Initially organized as a Delaware corporation in 1993, AsiaInfo moved major operations to China in 1995 and played an important role in the construction of the provincial access networks for China's national telecom carriers through its telecommunications business. Its acquisition of Lenovo’s IT services business in 2004, though, established it as a prominent supplier of all things IT security.

Today the company's operations are organized into AsiaInfo Technologies, which encompasses its telecommunications business, and Lenovo-AsiaInfo, which covers their IT unit. During the year ended Dec. 31, 2007, about 86% of the company's total revenue was from AsiaInfo Technologies, while the remaining revenue was from Lenovo-AsiaInfo.

AsiaInfo’s surfeit of solutions includes various software product suites, each given the name “Open” because the software is designed with open architecture for further development and customization for express functions. AsiaInfo usually combines its products together with its services to create customized solutions for individual customer needs.

In regards to demand for its products, the numbers tell the story. On Feb. 14, AsiaInfo reported results for the fourth quarter ended Dec. 31, 2007. Total revenue for the quarter was $40.8 million, an increase of 27% compared with the fourth quarter of 2006, and up 26% when compared to the third quarter of 2007. Net income was $8.46 million, or $0.18 per share, compared with $2.12 million, or $0.05 per share, in the year-ago quarter. Net revenue for the fourth quarter of 2007 was $35.1 million, an increase of 38% year-over-year, and 19% sequentially.

Not too shabby, considering AsiaInfo is firmly holding its own against the big boys of the telecom and IT security industry, including Amdocs Limited ($6.43 billion market cap), Shenyang Neusoft Company Limited ($16.18 billion market cap) and Cisco Systems, Inc. ($144.73 billion market cap).

AsiaInfo also comes to investors with a patina of bullish sentiment from analysts. On March 4, Kaufman Bros. said it believes the company has solidified its position as a leading provider of software to Chinese telecom companies. Coverage was initiated by the firm with a "buy" rating and $15 price target. Two days later on March 7, Roth Capital followed suit, beginning coverage of AsiaInfo with a "buy."

What better way to secure your assets than with a company whose trade is security?

Note: AsiaInfo Holdings, Inc. (Nasdaq:ASIA) is on the “Watch List” of Rising Star Stocks, a subscription investment newsletter from Business Financial Publishing, which also publishes SmallCapInvestor.com. As a Watch List company, AsiaInfo displays many characteristics found in successful stock winners, and is being closely monitored for possible inclusion in the Rising Star Stocks portfolio at a later date.

About the Author
Crystal D. Vogt is Managing Editor at SmallCapInvestor.com. Read More

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