Anyone know if this stock is going to rocket?

Five tech stocks that could deliver in 2004
Published: 08:10 Mon 2 Feb 2004
By Richard Lander, Editorial Director
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Picking some technology winners for 2004 is a far tougher job than finding those for 2003, but here are five companies that should have bigger things up their sleeve this year.

Our five technology tips for 2003 gained an average 78% in twelve months and several others that we selected in the middle to end of 2002 have done even better.


However, we have been warning for some time that valuations appeared to be running ahead of actual company results, and as we stand at this early stage of 2004, it looks highly unlikely that we will see anything like the levels of return available last year.


One veteran technology analyst, Richard Holway of Ovum, reckons we are likely to see a correction in technology stock valuations half way through this year, and his forecast for growth in the tech sector over the next decade is a very modest 5% a year. However, he does concede that there are still some good individual companies that should offer opportunities for greater returns.


The five tech companies we think could still do well this year are; Pipex Communications, Intec Telecom, Systems Union, Eckoh and, still speculative at this stage, Superscape.


* PIPEX (PXC) is an alternative telecoms company that has been rapidly built by taking advantage of a unique moment in history. The former GX Networks reversed into AIM-listed Zipcom and bought up several small companies that had invested millions of pounds of dotcom-era money in infrastructure only to burn through their cash before they could realise a return on their investment. Pipex's management has an aggressive strategy of cutting costs and leaving itself with the valuable infrastructure.


The company made an audacious 55 million acquisition of profitable internet service provider Pipex in October 2003 and has just produced its first profits before goodwill amortisation. It looks as though there could be more acquisitions in the pipeline, and the business now has the feel of one that could become a far larger player and a serious alternative telecoms operator to the UK business community.


The shares are currently at 10.5p, valuing the company at 187 million. This prices the business at 26 times this year's forecast earnings. While this may not be exactly cheap, you would be buying in to the distinct possibility that Pipex could become a much bigger player in the next 18-24 months.


* INTEC TELECOM (ITL) provides billing and operational systems software for telecoms companies. Its interconnect billing software enables operators to bill each other for calls carried across their networks and its mediation software gathers all of the necessary data from the telecoms switch to feed into systems such as billing and security. The company has had to scale down its expectations during the severe telecoms downturn, but has still managed to sign significant new business and turned in revenues for the year to September 2003 up 7% at 59.7 million with pre-tax profit before write-offs of 5.4 million from 2.2 million last time.


At 71.5p with a market capitalisation of 187 million the shares trade on a rating of 28 times next year's estimates. So at first glance it looks pretty fully valued. However, there are plenty of fund managers who seem to think that analysts are still being overly cautious on their earnings estimates in general, and that therefore there is scope for upgrades if the economic recovery shows signs of longevity. The punt on Intec is that for the type of software it provides to the type of global customers that it services, 148 million is still a pretty insignificant size with plenty of scope for upside.


* ECKOH TECHNOLOGIES (ECK) has spent the past couple of years incubating its new speech recognition technology, aimed at further automating call centre and interactive voice applications. The company has a deal with BT, under which BT hosts the system, and, hopefully, brings in some blue chip customers. Eckoh's bread and butter business is interactive voice response (IVR), and it recently announced a win with ITV to provide the voting, polling and interactive services used on programmes such as This Morning, CITV, Ant and Dec's Saturday Night Takeaway, Trisha and The Vault. (continued...)

The company saw turnover for the half year to September down slightly at 25.7 million, although continuing operations were up slightly. Operating losses were reduced to 1 million from 7.4 million and net losses down to 1.3 million from 9.4 million. The IVR business is profitable, but it is the new speech business that has yet to break even.


At 16.5p (38.6 million market cap), the company is valued at 18.2 times next year's forecasts, but a couple more large wins for the speech software could significantly transform the company.


* SYSTEMS UNION (SUG) is the developer of Sun Systems and Pegasus accounting software chaired by serial entrepreneur Bob Morton. It ran into trouble a few years ago when, known as Freecom at the time, it made a disastrous acquisition of ecommerce company Oneview, for which it had to write off a massive 100 million.


* SUPERSCAPE (SPS) has been promising jam to investors for so long now that many have given up and walked away. Citywire has followed the company for several years, and now reckons that if 2004/5 is not Superscape's year, nothing will be.


The developer of real-time three-dimensional graphic software originally designed for virtual reality on a PC finally found the perfect market for its technology in the mobile phone space, and particularly for the next generation of mobile phones. The company effectively re-wrote its software for wireless, and in the past couple of years signed a deal with chip designer ARM to embed the software into ARM's mobile phone chips. Significant deals with handset manufacturers and content providers have started to flood in but as yet we have not seen any effects of these on revenues or profits. The last published results in October showed turnover for six months to July of just 94,000 down from 510,000 the previous year with losses down 26% to 3.7 million. However this did not include any revenues from the wireless business.


Since the start of this year the company has announced licence deals with two further brand owners. But there is still a problem with Superscape. Citywire has been talking about its jam tomorrow story for a couple of years now. Research analysts have clearly been driven away from the stock, and even house broker Evolution Beeson Gregory has not written on the stock since September, at which time it was still expecting a 5.4 million loss for the year just closing.


ARM has taken a 12% stake in Superscape and also put substantial research and marketing effort into the deal. There are some very large names being announced as licence partners, and Superscape could be on the cusp of becoming a major supplier of both software and content (sophisticated 3D games in particular) to the mobile industry. If that were to happen, its 34p share price and 42 million valuation could look very cheap in a couple of years time. But we are still waiting to see the money roll in.

Has the overhang now been cleared.

Superscape Group PLC
03 February 2004

3 February 2004



SUPERSCAPE SIGNS 500,000+ EUROS LICENCING AGREEMENT WITH LEADING HANDSET
MANUFACTURER


Superscape Group plc (LSE: SPS) announces that it has signed a major licensing
agreement with a value in excess of 500,000 euros with a leading handset
manufacturer for a portfolio of 3D interactive mobile games. In addition,
Superscape will receive on-going royalties based on revenue generated by network
operators from the distribution of these games.



About Superscape

Superscape specialises in industry standard 3D technology for wireless
environments. The company's Swerve technology is a complete solution comprising
a software-only 3D engine (Swerve Client), a powerful development tool
integrated into 3ds maxtm (Swerve Studio) and a catalogue of 3D games (Swerve
Content) available for licensing.



Superscape is quoted on the London Stock Exchange and has corporate offices in
Hook, Hampshire (UK) and San Clemente, California (USA).


I like this bit "500,000 euros"

Regards

up 8.5% already

I like this bit: "on-going royalties"

Dont know where IC got that this co has not got future..... idiots!!

xmortal,

agreed. and once the revenue starts coming in the price will start to rise. for the moment tho my advice is hang on or add. this is all my opinion of course and I am a holder.

skids

Very little interest in a company which looks to have a great future. Will love to see where the price is after the next set of results.

Agree look at the selling and buying volumes. Buying almost non existant has been for a while.

Large investor offloading 100,000 sells going through.Looking sub 30p soon.

momentum, given the excellent contract and agreement news, what are your views as to why there is so much selling pressure?

Still classed by many as jam tomorrow stock.Anyone who over the past year who bought in sub 25p is still sitting on a tidy profit.Why they are selling is anyones guess,its not vast quantities that are being sold, but its the lack of buying to spport theselling that is forcing the price south, Recent news has not attracted any significant buying interest.It is this that i find disappointing.

qiven the recent news the prices should have passed and stayed at 40p at least. I dont like the way this share is behaving, it is not normal. The 'normal' reaction would be buys as the news have been good. I will wait and see what is the reaction of the market once the next set of company results are out. If the news are good and it does not react 'positively' I mean at least 15% increase then it is doomed. There are other small shares that more attractive.

xmortal, ignore short term trades and look at the fundamentals. the results will probably show 1m+ turnover but the past means nothing in this case. SPS is risky, but it has a significant amount of cash in the bank and was suported at 29P by institutions buying 10m worth of shares, recommended by three brokers as a tip of the year (no one else got more than 1) and followed closely by citywire even though they are critical of management. Newsflow is the key, licence agreements with phone companies are even more important. the threat to their position is only a threat if the opposition have their client embedded on the chipSPS has three of the top five, only Nokia haven't signed with anyone and this is the crux, if they sign nokia then it is game over for the competition, anyone developing games for mobiles will develop on swerve, they wont even look at the rest but SPS have to sign nokia!

News with Psion & the sale of SymbianOS to Nokia. This could be significant to SPS?

Superscape is listed as being a platinum partner with Symbian. This should become very interesting with the fact Nokia does not want Windows Mobile on Nokia 3g phones. Nokia will need Swerve more than ever IMO.

Will Superscape be able to make some significant news announcements themselves now?

I hold shares in both Psion and Superscape.Psion has taken a battering today as it seems they haven't got enough money from the sale as anticipated ,of the Symbian OS.

Superscape is slightly down today possibly with that news, although with the news announced recently and the three brokers tips at the begining of the year. I can't understand why it's lost about 20% of it's share price (from recent highs) unless people in the know are bracing for some make or break news.On the trading today there has been a lot of selling which is hopefully down to lowering the price before another buying phase takes place.Who knows it could be on a deal with Nokia now they have an involvement with SPS/Symbian OS.

I believe Nokia have bought Symbian OS with a view to see what type of Company SPS before hopefully signing a deal to use swerve on it's 3G phones.Very shrewd on their part as they can get an insight before committing.Also good timing with all the good news recently about SPS

Can anyone tell me why on the trades page today, there are a number of Superscape deals that are unknown whether they are bought or sold

Regards

Marty Boy

Small companies will have a lot of the trades delayed, so you don't know what was the buy/sell price at the time, and even then don't go by the trades information as that is often incorrect anyway... I have seen several of my 'sells' being reported as buys and vice versa

This is off superscapes web site.


Superscape To Participate In Europes First Brew Developer Conference
February 11, 2004

Back to press room

Superscape plc, specialists in the development of industry standard 3D technology to deliver console quality, over-the-air (OTA) games on mobile phones, will participate in the first BREW Developers Conference to be held in Europe on Thursday, February 12, 2004 at the Victoria Park Plaza Hotel in London.

Designed to provide a forum for top application publishers, developers, wireless operators and device manufacturers, the Conference will be chaired by Johan Lodenius, senior vice president of European Business Relations for QUALCOMM Internet Services.

Paul Beardow, Chief Technology Officer at Superscape, will be speaking as part of the BREW Publisher/Developer Roundtable section of the programme on Superscapes Swerve 3D technology, which has recently been extended for QUALCOMMs BREW solution. This latest version of Swerve provides BREW developers with the ability to quickly and easily create interactive 3D applications to integrate with other BREW-based services on mobile phones.

Superscape looks forward to this opportunity as weve had a great experience thus far working with QUALCOMM and developing our 3D technology for the BREW solution, said Beardow. QUALCOMM has presented us with a tremendous opportunity to expand our technology offering to operators around the world and were happy to share our positive experience with other content providers in an attempt to assist in the adoption of wireless data services in Europe and around the world.

QUALCOMM is thrilled to have Superscape agree to share their success with the BREW system to this gathering of key players in the European wireless market, said Jan Lezny, senior director of European Business Relations and Operations, QUALCOMM Internet Services. Superscape has demonstrated the ability to take advantage of all the BREW solution has to offer, both technically as well as on the business side. Conference attendees are sure to benefit from this real world case study.

Other speakers at the one day event include representatives from leading operators, Verizon Wireless in the United States, VIVO in Brazil as well as leading content providers including the founder of Electronic Arts and a representative from Sony Pictures Digital, with whom Superscape is already working on the development of a new BREW-based game linked to the newly released S.W.A.T. movie.

QUALCOMM`s BREW system provides products and services that connect the mobile marketplace value chain, which includes application developers, publishers, content providers, device manufacturers, operators and consumers.


For more information contact: ir@superscape.com

Funny that IC says this company has no future when it is working so closely with Qualcomm. These two appear to be the big front runners in 3d mobile games, I'm not sure but with 15m in the bank at the last count and a market cap of around 35m, is 20m too much to pay for a potentially huge winner, you decide. The one thing that is very beneficial for long term buyers and you will have to buy for the long term in SPS, the level of cash really removes the risk for at least two years!