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Vanda Pharmaceuticals Inc (Nasdaq: VNDA), RRSat Global Communications Network Ltd (Nasdaq: RRST) and Libbey Inc (Nasdaq: LBY) are among the new 52-week lows in Monday's trading among companies with market capitalizations under $750 million.
Amerigon Inc (Nasdaq: ARGN), Trailer Bridge Inc (AMEX: TRBR) and Old Second Bancorp Inc (Nasdaq: OSBC) are also among the new 52-week lows.
Here are the new 52-week lows among small caps:
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HMS Holdings Corp (Nasdaq:HMSY), RRSat Global Communications Network Ltd (Nasdaq:RRST) and Cheniere Energy Inc (AMEX:LNG) are among the biggest percentage losers in Monday's trading among companies with market capitalizations under $750 million.
Citizens Republic Bancorp Inc (Nasdaq:CRBC), Lanoptics Ltd (Nasdaq:EZCH) and Amerigon Inc (Nasdaq:ARGN) are also among the biggest percentage losers.
Here are the biggest percentage losers among small caps:
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Here are the biggest percentage gainers and losers in pre-market trading among companies with a market cap between $50 million and $750 million:
Biggest percentage gainers:
• STEC, Inc. (Nasdaq:STEC), up 10% after the provider of flash memory products posted first-quarter results that trumped analysts’ estimates and issued rosy second-quarter guidance above the consensus on Wall Street.
• Eagle Test Systems Inc. (Nasdaq:EGLT), up 9%.
• Approach Resources, Inc. (Nasdaq:AREX), up 9%.
Biggest percentage losers:
• RRsat Global Communications Network Ltd. (Nasdaq: RRST), down 4.3%, despite reporting first-quarter results that met Wall Street’s expectations. The provider of content management and global distribution services also issued second-quarter revenue guidance that was inline with the Street.
• Immersion Corp. (Nasdaq:IMMR), down 3.3%.
• PeopleSupport Inc. (Nasdaq:PSPT), down 2.3%.
Bruce Springsteen sang “Fifty-seven channels and nothin’ on,” but that was when satellite technology was in its infancy. The World Teleport Association estimates that there were 13,000 satellite television channels in 2005; the number is projected to more than double to 29,000 by 2013.
That’s sweet music to the folks at RRSat Global Communications Network Ltd. (Nasdaq: RRST). The Omer, Israel-based company operates a “teleport” in southern Israel, with satellite dishes that bounce signals through any of several dozen satellites to reach over 300 television and 80 radio channels in more than 150 countries.
RRSat managed to evolve with satellite technology. It was founded in 1981 by CEO David Rivel, who still runs the company, to import giant satellite dishes — up to 40 feet in diameter — and install them at Israeli TV broadcast stations.
In 1996, the Israeli government granted the company the first private license to transmit TV and radio signals by satellite, and the company’s life as a video distributor began. Today, RRSat accrues 75% of its revenues by sending TV and radio programs around the world through leased satellite transponders and fiber optic cables. It may beam programming from niche producers who cannot afford their own teleports, such as Fashion TV and the God Channel, to major networks like CBS and Fox. Or it may deliver programs on behalf of media giants such as Fox and CNN to distant stations like Russia Today, Thai Global Network and Al Jazeera.
It also offers content management services: RRSat digitally stores programming and advertising, customizes them (such as adding subtitles), organizes them into broadcast channels and beams the channels to specialized markets that include Russia, eastern Europe and the Middle East.
The total market for teleport services is about $13 billion, although the large broadcasters transmit most of their material themselves. RRSat and two privately owned pure play teleport competitors have a combined market share of just 5%, leaving much room to grow.
The other two competitors are larger than RRSat: Globecast, based in France, is a subsidiary of France Telecom, and has revenues about eight times that of RRSat. Arquiva, based in the United Kingdom, has revenues estimated at three times that of RRSat. But a November 2007 report by Susquehanna Financial Group asserts that “the location of RRSat’s teleport in Israel affords it an unmatched cost advantage” over those two, because its teleport can reach 95% of the world’s population in just one satellite hop.
Over the last four years, RRSat has grown at a compound annual growth rate of about 40%. On Jan. 31, it announced fourth-quarter revenues up 36% from a year earlier to $16.3 million, with adjusted net income up 37% to $3.6 million. It generated $4.7 million in operating cash flow that quarter. For the year, revenues were up 37% to $59.2 million, while adjusted net income increased 52% to $12.3 million.
The big question is whether this stock is already fully valued. It went public at $14 in November 2006, dropped to its current 52-week low of $10.35 in February 2007, but then zoomed back and hit its 52-week high of $26.50 on Sept 24. It dropped in the recent stock market correction and closed at $15.09 on Jan. 30, then shot back up after the earnings announcement to close at $18.11 on Feb. 1. The stock closed at $18.05 on Monday. Its market cap is $312 million.
Most analysts rate it “outperform” or “buy,” but price targets vary from $18 to $27. “The company will do well regardless of economic downturns” because of its cost efficiency, says Susquehanna’s Irit Elrad-Jakoby. Susquehanna does not set target prices, but Elrad-Jakoby has a “positive” rating on RRSat, the equivalent of a “buy.”
The most skeptical is James McIlree with Collins Stewart (formerly CE Unterberg Towbin), who rates it a “hold.”
“It serves a niche ignored by the large satellite companies,” he says, but he’s concerned that while RRSat’s revenue guidance for 2008, at $75 million to $76 million, is slightly higher than Wall Street’s expectations, its gross margin guidance came in below expectations. Management offered no explanation for the lower margin estimate. “The stock is not expensive, but it’s not cheap either,” says McIlree. “I’m concerned that other analysts will lower their estimates. I’d wait for a better time” to get into the stock.
RRSat, which raised $45 million in its IPO, had also said it would make an acquisition (probably more teleport facilities) by the end of 2007, but no deals have yet been announced. Susquehanna analyst Irit Elrad-Jakoby believes a purchase or two will be completed this year. It may add to earnings, but it’s not certain if that would be enough to make the stock a bargain.
The issue is whether the company will be profitable enough to boost the stock beyond its current multiples. The day before earnings were announced, McIlree at Collins Stewart estimated RRSat (RRST) was trading about 13% below its peer group‘s EV/EBITDA. He felt that was justified, given its location in Israel and the fact that three shareholders own a majority of the company’s shares.
And whether, despite 29,000 channels, there will yet be something worth watching.
Not long ago, when you wanted to make a call, you used a cell phone or even a run-of-the-mill telephone. When you wanted to watch TV, you used a television. These days, though, almost all our daily communication and media needs can be met through the Internet.
Because of this trend, the high demand for bandwidth is upon us and continues to expand in response to the rapid deployment of bandwidth-intensive services such as Internet phone, Internet television, online gaming and streaming video.
International Data Corp. forecasts the U.S. subscriber base for Internet phone and Internet television will grow at annual rates of 64% and 131%, respectively, between 2005 and 2009. Online digital game downloads are forecast to increase to 3.3 billion by 2009 from 1.2 billion while overall broadband penetration is projected to grow from 34% to 53% of U.S. households.
Poised to prosper are Switch & Data Facilities Company, Inc. (Nasdaq: SDXC) and RRSAT Global Communications Network Ltd. (Nasdaq: RRST), two companies that provide services that address rising bandwidth demand.
Switch & Data Facilities provides network neutral connection and collocation services for telecoms, Internet service providers and online content providers. Initially, the various networks that made up the Internet connected at public network access points. Eventually these became owned and managed by telecoms. As traffic grew, however, these network access points became overloaded and some network service providers began connecting directly by establishing fiber optic links between facilities. These links, expensive to build and maintain, led to the formation of commercial businesses such as Switch & Data, which operates network neutral Internet exchanges and collocation facilities.
Switch & Data’s interconnection services allow customers to directly connect and exchange network traffic. Its collocation facilities provide space and power for customers’ networking and computing equipment, thus enabling the customer to avoid building and maintaining their own facilities. Because Switch & Data’s operations are network neutral (i.e. it doesn’t own or operate its own network), customers are able to connect directly with telecoms and each other. This results in lower network transit cost, improved network performance and reduced time to market. With 33 facilities across 23 markets, Switch & Data operates the largest network neutral footprint in North America. The company has facilities in 14 of the 15 largest U.S. metropolitan areas and has approximately 900 customers, including AboveNet, Inc. (OTC: ABVT), AOL, Qwest Communications International, Inc. (NYSE: Q), DirectTV Group, Inc. (NYSE: DTV), Google Inc. (Nasdaq: GOOG), Yahoo! Inc. (Nasdaq: YHOO), YouTube and many others.
In December, Switch & Data announced the creation of a new practice focusing on the entertainment content market. The company plans to provide specialized services to online gaming companies and digital media companies that will assist them in designing, developing and deploying infrastructure solutions. During the first nine months of 2007, Switch & Data’s revenues expanded 22% year-over-year to $100 million from $82 million, operating income tripled to $3.2 million from $1 million and net losses (before preferred stock accretions and dividends) declined to $3.3 million from $10 million. The company is targeting 23% growth in full-year 2007 revenues to $137 million and expects to generate positive 2007 EBITDA (earnings before interest, taxes, depreciation and amortization) of $42.5 million. Analysts estimate Switch & Data will produce 100% growth next year and 124% annual growth over the next five years. My $25 price target for Switch & Data is above the current share price of $16.06 at Tuesday’s close. Over the last 52 weeks, shares have ranged between $13.84 and $22.
RRSAT Global provides content distribution to television and radio broadcast customers through its proprietary RRSat Global Network, which consists of satellites, terrestrial fiber optic transmission capacity and the Internet. RRSAT provides distribution services for nearly 400 television and radio channels across more than 150 countries.
Technology advances have led to rapid growth in the number of broadcasters targeting a worldwide audience. According to EuroConsult, the number of satellite TV stations has increased to more than 13,000 in 2005 from 1,000 in 1995 and the number is forecast to exceed 29,000 by 2013. Satellite TV broadcasters have found delivering content via a network infrastructure that integrates satellite-based and terrestrial fiber optic capacity is the most reliable and least expensive way to secure global distribution. Teleports, which allow for the integration of satellites with fiber optic networks, have emerged as the primary solution. Teleport providers such as RRSAT serve a $13 billion worldwide market, according to a 2005 report by the World Teleport Association.
RRSAT’s content distribution services include uplink, downlink, turnaround, encryption, encoding, storage, localization and time delay services; integrated content management such as production and playout services, and satellite news gathering services. The company transmits information to 25 orbiting satellites and receives transmissions from 48 satellites. Its transmission range covers each of the world’s major population centers. RRSAT’s satellites connect with strategically located teleports, which comprise the ground-based portion of the satellite transmission network. Its principal teleport, located in southern Israel, provides access via a single connection to satellites that transmit directly to North and South America, Asia, Europe, Africa and Australia. RRSAT delivers television and radio broadcast content for its customers to cable TV channels, dish satellite TV stations, the Direct to Home market and the public Internet.
During the first nine months of 2007, RRSAT’s revenues grew 37% year-over-year to $42.9 million from $31.2 million and net income climbed 47% year-over-year to $8.2 million, or $0.47 per share, from $5.6 million, or $0.42 per share. The company recently increased its guidance for full-year 2007 revenues to $58 million, up 35% from last year. Analysts expect RRSAT to enjoy 30% growth next year and 25% annual longer-term growth. My $27 price target for RRSAT Global Communications is above the current stock price of $18.97 at Tuesday’s close. Shares for RRST have ranged between $10.35 and $26.50 over the last 52 weeks.
During a morning conference call, satellite content distributor RRSat Global Communications Network Ltd. (Nasdaq: RRST) executives said new contracts will continue to propel revenue growth. A recently announced expanded contract with the Soundtrack Channel – a video channel devoted to movie music and entertainment – and a $7 million contract renewal with satellite broadcaster Direct to Home will increase revenue, CEO David Rivel said during the call.
Rivel would not say if the contract growth will continue throughout the year, but reaffirmed the company’s outlook of a year-over-year revenue increase.
This morning, RRSat increased its fiscal year revenue guidance to between $57 million and $57.5 million, compared with its previous outlook of between $55.5 million and $56 million. The company said it expects revenue for the third quarter ended Sept. 30 to be in the range of $14.7 million to $14.9 million, compared with $11.54 million a year earlier.
The weakened U.S. dollar has not impacted the company’s bottom line dramatically, Rivel said.
“Looking ahead, we believe 2007 offers many opportunities for the company,” Rivel said. “We are generating substantial organic growth.”
Rivel said the company has also identified several acquisition targets that will help RRSat expand its North American presence. The company currently provides services in Europe, Russia and Asia.
Before the opening bell, RRSat said it earned $2.6 million, or $0.15 a share, in the second quarter ended June 30, compared with $2 million, or $0.15 a year earlier. Revenue totaled $14.7 million, up from $10.3 million in the year-earlier period.
In midday trading, shares of the small-cap company are down $1.53, or 6.63%, at $21.56. Over the last 52 weeks, shares of the company have ranged between $10.35 and $24.92.
Local.com Corp. (Nasdaq: LOCM) reported that it was granted a patent for cell phone-enabled local search. The patent also covers several advertising models associated with the search format.
The founder of Israel-based intimate apparel and socks maker Delta Galil Industries (Nasdaq: DELT) announced he is selling his shares and transferring control of the company to the vice chairman of the board. CEO and Founder Dov Lautman is selling 2.5 million shares to GMM Capital LLC, which is controlled by Delta Galil’s vice chairman Isaac Dabah.
Telecommunications company North Pittsburgh Systems (Nasdaq: NPSI) is being acquired by Consolidated Communications Holdings Inc. (Nasdaq: CNSL) for $375 million in a cash and stock deal.
These are the biggest percentage gainers in Monday's trading among companies with market capitalizations under $500 million:
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| tags: gainers, percentage, Russell 2000, small cap, small cap companies, small cap investing, small caps, volume, NASDAQGM:ZN, NASDAQGM:PENX, NASDAQGM:APSA, NASDAQGM:LWAY, NASDAQCM:LOCM, NASDAQGS:RRST, :DELT, :LTEC, :NPSI, :VOL
Find out what companies are on the "short lists" of the research staff of Growth Report and Rising Star Stocks. New profiles are posted on Thursdays.
RRSat Global Communications Network Ltd. (Nasdaq: RRST)
Omer, Israel 84965
http://www.rrsat.com
RRSat Global Communications Network Ltd. is a Middle East-based TV and radio broadcast distributor and value-added production house. Since 2003, the company has more than doubled its revenues to $43.28 million.
Headquartered in Israel, the company provides content to 265 television channels and 80 radio stations in 150 countries using up to 48 satellites. RRSat’s network consists of terrestrial transmission facilities (satellite dishes) and fiber optic capacity.
RRsat customizes and transmits programming to satellite, for downloading and rebroadcast via cable, satellite or direct to home satellite TV consumers.
The company also provides satellite newsgathering services (SNG) and production and broadcasting services for video and radio in Israel, territories of the Palestinian Authority and the greater Middle East.
Some of the company’s clients include Canal Europe, Russia Today, Thai Global Network, and Turkish Radio and Television. The company also provides occasional services to CBS, Fox News, Al Jazeera and NBC News, among others.
RRSat’s revenues for the year ended Dec. 31, 2006 were $43.28 million, up 38% from 2005. The revenue growth rates for the prior two years (2005 and 2004) were 32% and 69%, respectively.
Net income (GAAP) was $2.6 million for the first quarter of 2007, up 68% from the first three months of 2006. Per diluted share, net income was $0.15 in the first quarter of 2007, versus $0.12 a year earlier.
The Company’s prime competitors include GlobeCast, BT Broadcast Services, and Belgacom SA.
Find out what companies are on the "short lists" of the research staff of Growth Report and Rising Star Stocks. New profiles are posted on Thursdays.
RRSat Global Communications Network Ltd. (Nasdaq: RRST)
Omer, Israel 84965
http://www.rrsat.com
RRSat Global Communications Network Ltd. is a Middle East-based TV and radio broadcast distributor and value-added production house. Since 2003, the company has more than doubled its revenues to $43.28 million.
Headquartered in Israel, the company provides content to 265 television channels and 80 radio stations in 150 countries using up to 48 satellites. RRSat’s network consists of terrestrial transmission facilities (satellite dishes) and fiber optic capacity.
RRsat customizes and transmits programming to satellite, for downloading and rebroadcast via cable, satellite or direct to home satellite TV consumers.
The company also provides satellite newsgathering services (SNG) and production and broadcasting services for video and radio in Israel, territories of the Palestinian Authority and the greater Middle East.
Some of the company’s clients include Canal Europe, Russia Today, Thai Global Network, and Turkish Radio and Television. The company also provides occasional services to CBS, Fox News, Al Jazeera and NBC News, among others.
RRSat’s revenues for the year ended Dec. 31, 2006 were $43.28 million, up 38% from 2005. The revenue growth rates for the prior two years (2005 and 2004) were 32% and 69%, respectively.
Net income (GAAP) was $2.6 million for the first quarter of 2007, up 68% from the first three months of 2006. Per diluted share, net income was $0.15 in the first quarter of 2007, versus $0.12 a year earlier.
The Company’s prime competitors include GlobeCast, BT Broadcast Services, and Belgacom SA.
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