eOn Communications Corp. (NASDAQ: EONC)
eOn Communications Corp. (EONC) is a global provider of innovative converged communications solutions. EONC’s offerings are built on reliable open architectures that enable easy adoption of emerging technologies, such as Voice over Internet Protocol (VoIP) and concepts, such as Service Oriented Architectures (SOA). The Company is focused on delivering proven Time-division multiplexing (TDM) and VoIP products and services for enterprises that will improve business performance and customer retention. It has a long history of delivering superior products and services to the communications marketplace and is committed to continue this strategy for the future.
Founded in 1991, EONC is based in San Jose, Calif., and has offices in Corinth, Miss., Kennesaw, Georgia, and Beijing, People’s Republic of China.
| Share Statistics (16-Dec-09) |
|
FY 2008 |
FY 2009 |
% Chg |
Q4 2008 |
Q4 2009 |
% Chg |
|||||||||
| Symbol |
EONC |
Revenue, $Mn |
6.99 |
10.64 |
52.22% |
1.60 |
5.09 |
218.13% |
||||||||
| Current price |
$3.43 |
Gross marg. |
54.94 |
44.92 |
-1.002 b.p. |
53.75 |
41.26 |
-1,249 b.p. |
||||||||
| 52wk Range: |
0.37-4.20 |
Oper. margin |
– |
0.97% |
– |
– |
– |
– |
||||||||
| Avg Vol (3m): |
79,440 |
Net margin |
-49.36 |
-3.20 |
4,616 b.p. |
-21.25 |
1.96 |
2,321 b.p. |
||||||||
| Market Cap. |
9.38M |
|
|
|
|
|
|
|||||||||
| Dil. Shares Outst. |
2.74M |
EPS, $ |
-1.05 |
-0.12 |
-88.57% |
-0.12 |
0.04 |
-1.33% |
||||||||
Source: Reuters.com, SEC Filings
Financial Summary
For the fiscal year ended July 31, 2009, EONC’s revenue increased 52% to $10,65 million from $6.99 million in fiscal year 2008. It posted a net loss of $339,000 or $0.12 per common share compared to net loss of $3.45 million or $1.27 per common share for the fiscal year ended July 31, 2008. Net income for the year excluding the impact of the imputed interest expense was $141,000 or $0.05 per common share. In 2009, the Company’s cash reserves increased by 94.82%, or $1.47 million. The Company earned $1.26 million from its operations for a Cash Flow Margin of 11.80%. In addition the Company generated $209,000 and $2,000 cash from investing and financing, respectively. EONC has a Debt to Total Capital ratio of 0.47%, little changed from the previous year’s 0.00%.
Financial Strength
| Company | Industry | Sector | S&P 500 | |
| Quick Ratio (MRQ) | 1.71 | 2.46 | 1.72 | 0.93 |
| Current Ratio (MRQ) | 2.99 | 2.88 | 2.03 | 1.10 |
| LT Debt to Equity (MRQ) | 67.02 | 22.81 | 18.32 | 123.98 |
| Total Debt to Equity (MRQ) | 86.94 | 37.14 | 29.19 | 184.11 |
| Interest Coverage (TTM) | – | -0.14 | 0.36 | 25.42 |
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=EONC.DF
Analyst Consensus
No consensus analysis data available.
Investment Highlights
EONC’s offerings are built on open architectures that enable adoption of technologies, such as voice over Internet protocol (VoIP) and concepts, such as service-oriented architectures (SOA). The Company’s solutions enable its customers to easily leverage flexible technologies in order to communicate more effectively. EONC offers the Millennium Converged Communications platform and the eQueue Multimedia Contact Center Solution.
The Millennium is a modular, multi-shelf system combining reliable hardware design with the flexibility of easily configurable software supporting both basic and complex telephony operations. The Millennium is digital end-to-end and VoIP compatible. Its system design is based on distributed processing and DSP technology.
The eQueue® Multi-Media Contact Center is the Company’s proven solution to customers who are looking to evolve from being a traditional call center company to a multimedia contact center. Unlike traditional telecom solutions, the eQueue System is designed to replace proprietary communication devices such as Private Branch Exchanges, Automatic Call Distributors, Interactive Voice Response systems, recording systems, workforce management systems, voice mail systems, and Computer Telephony Integration middleware systems with an all-in-one blended communications system. The benefits of using an eQueue include improved customer satisfaction, retention and loyalty, increased agent productivity and lower total cost of ownership.
In addition, the Company provides eNterprise SIP Business Telephones to extend communications features of VoIP soft switch platforms to users over Internet protocol networks.
Last month, EONC debuted its new server-based IP communications platform called the eConn IP-PBX, providing enterprises with a highly scalable, feature-rich communications system designed to support businesses from 10 to 1,000 users. It was built on commercial off-the-shelf (COTS) hardware and the Linux OS utilizing industry standard SIP VoIP and TDM technologies.
Earlier this year, EONC and Esna Technologies launched a version of their market leading mobile unified communication software for the eOn eNterprise IP Messenger for the RIM BlackBerry devices in the BlackBerry App World (www.blackberry.com/appworld/). Jack Dienno, EONC vice president of Sales, stated, “Through mobility solutions provided by eOn’s eNterprise IP Messenger coupled with wireless devices such as BlackBerry, we’re able to offer our customers anytime, anywhere connectivity with presence management tools that improve employee productivity and foster profitable relationships with their clients and partners.”
EONC offers its comprehensive portfolio of products and services to a large and varied customer base that spans a great number of applications and industries. The Company has systems installed worldwide in retail, government, schools, service bureaus, major league sports, Emergency 911, financial sectors and more. Its customers include large national corporations, mission-critical applications, small- to medium-size enterprises and start-ups.
Recent News:
EONC recently posted a profit of $379,000, or 14 cents a share, for fiscal first-quarter ended October 31, 2009, the Company’s third consecutive profitable quarter. Excluding the impact of an interest expense, the Company would have posted a profit of 16 cents a share in the quarter. Revenue surged 154% from a year earlier to $4.5 million. Cash, cash equivalents and marketable securities increased 35% to $3.28 million from $2.42 million as of October 31, 2008, and increased 9% from $3.01 million as of July 31, 2009. Commenting on the Company’s performance, David S. Lee, chairman of EONC’s board stated, “Our profitability in the last three quarters has resulted in earnings of $1,083,000, or $0.40 per common share before imputed interest expense. Despite adverse economic conditions, we have achieved positive results through sound management.”
Source: http://www.eoncc.com/
Industry Overview: According to a Research and Markets report, the global telecom services revenue reached $1.7 trillion in 2008, representing a 5.5% increase on 2007, and a significantly slowing of growth (which stood at 9.3% in 2007). Over the forecasted period to the end of 2013, growth is projected to slow to a five-year compound annual growth rate (CAGR) of 2.8%. In 2008, it was reported that world’s total number of fixed telephone subscribers reached 1.27 billion, representing a minimal growth of 0.6% over 2007 and a penetration rate of 19.2%. With a combination of rapidly expanding middle class and increased privatization of key industries, Research and Markets reported that faster-growing regions are Latin America and the Caribbean (LAC) and Thailand, Indonesia, Vietnam & Philippines/Pacific (AP). The report stated that North America has the slowest growth rate but is region with the largest telecommunications services revenue, Europe and Middle East/Africa (EMEA) exhibits a slightly higher growth rate due to growth in the wireless market and growth from less developed sub-regions of Eastern Europe.
Technical Analysis
Source: http://stockcharts.com/h-sc/ui
EONC is trading above its 13 day moving average. This is considered to be the sign of a bullish trend. There is added weight to this indication because the moving average is rising and suggests that there has been buying interest in this stock.
EONC’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, EONC is trading near its upper Bollinger Band. This suggests that the stock price is high relative to its recent price action.
The MACD for EONC currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9day moving average. Second, the MACD is above 0 which implies that the underlying moving averages are trending higher.
Comparative Analysis
| Company Name |
Ticker |
Price per |
Mrkt. Cap. |
P/E |
P/S |
||
| Dec-16-2009 |
symbol |
Share, $ |
$ Mn |
2009 |
2010 |
2009 |
2010 |
| Cisco Systems Inc. |
CSCO |
23.45 |
134,900 |
16.40 |
14.47 |
3.57 |
3.24 |
| Polycom Inc. |
PLCM |
22.88 |
1,930 |
19.56 |
17.07 |
2.02 |
1.82 |
| AltiGen Communications Inc. |
ATGN |
0.87 |
14.07 |
n/a |
n/a |
n/a |
n/a |
| ShoreTel Inc. |
SHOR |
5.74 |
255.18 |
n/a |
n/a |
1.80 |
1.48 |
| Ditech Networks Inc. |
DITC |
1.29 |
33.77 |
n/a |
n/a |
n/a |
n/a |
| ADTRAN Inc. |
ADTN |
22.73 |
1,430 |
19.59 |
17.2 |
2.97 |
2.6 |
| Nortel Networks Corp. |
NRTLQ |
0.03 |
16.94 |
n/a |
n/a |
n/a |
n/a |
| Zoom Technologies Inc. |
ZOOM |
5.94 |
44.29 |
n/a |
n/a |
n/a |
n/a |
| NetGear Inc. |
NTGR |
21.98 |
761.01 |
39.96 |
19.98 |
1.18 |
1.05 |
| Median |
|
|
|
– |
– |
– |
– |
| eOn Communications Corp. |
EONC |
3.43 |
9.38 |
n/a |
n/a |
n/a |
n/a |
Source: Thomson Financial
Insider Trading Activity
| NET SHARES PURCHSE ACTIVITY
Inside Purchases – Last 6 Months |
||
|
Shares |
Transaction |
|
| Purchases |
25, 000 |
2 |
| Sales |
n/a |
0 |
| Net Shares Purchased (Sold) |
25, 000 |
2 |
| Total Insider Shares Held |
740.50K |
n/a |
| % Net Shares Purchased (Sold) |
3.5% |
n/a |
| Net Institutional Purchases — Prior Qtr to Latest Qtr | |
|
Shares |
|
| Net Shares Purchased (Sold) |
(46, 301) |
| % Change in Institutional Shares Held |
(51.2%) |
Source: Yahoo Finance
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