Tipped by the independent 2/01/2004

........."And so to our traditional "wild card". Pipex Communications, formerly known as GX Networks, is a telecoms company created by one of the entrepreneurs behind Ukbetting, Peter Dubens. It has been assembled from six smaller players. The ambitious company is generating cash for the first time but is still not widely followed in the City. It could be an undiscovered gem".

PXC (nee GXN) has been the darling of my portfolio since I bought on a Shares Mag tip last year. Got my first batch at 4.9p making it officially my first double-bagger!

overgrowth - what time frame do you have for the possible 35p....end of 2004 or 2005. It will be interesting to see the full year accounts as all the write offs should be completed and then looking at profit from then on. I think the 1 pound mark is still a long way off as the mc will be massive....unless they merge or take over again. I know you can never second guess but I think we will see stability for a while, get more cash to fund purchase to not dilute shares, before thay purchase more.Interested in how others see it.

Hmmm. good question, particularly as I was quoting the 35p from another poster.

Full year accounts are crucial and over the next couple of months we need to see evidence of continued institutional buying (which has been going on for some time).

Judging by the rate at which some other TMTs have risen I would be tempted to say end of 2004, though I think PXC is more likely to be a slow solid rise to complement the way the company are gradually building on their successes. I'll stick my neck out and say end of Q1 2005 and PXC will be at or around 35p.

Whereas some companies' share prices have risen too far too fast, I think that only solid justifiable increases will be seen with PXC. The market cap is going to be hefty as the price rises and the business needs to be there to back this up.

Pipex going again, is it just volume that is driving this share up, eager to bank some profit but dont want to miss out on long term... Does that 16p barrier look relastic in next six months?

This is my third best punt after PDX and ITU. I came in at 6.88 and am expecting a triple banger within 3 months

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.

I like you hold PDX and PXC, got in 4.88 and 6.89 on PXC so should start looking
at banking some profit soon...

Would not bank any profit untill the share realy stalls, I bought at 3.3 but think there is still a lot more in this one yet. I think the punters who hold on till 2005 will be very happy. The question is will they buy again this year to keep the momentum going. The banks will be happy to lend but what is out there and ready to purchase as most stocks seem to be on the up at the moment.

Sitting pretty at present just watching the price rise week after week at present, just waiting for PDX to go now, that should motor once contract details
released soon.

Could see the 16-20p barrier pretty soon, as recent reports by PIPEX suggest all is going excellent and earnings future very rosy indeed.

Acquisitions news may follow soon I think due to last statement hints, any suggestions holders?

Having bought pxc at 7p I'm now up 57%, I've set a stp loss at 9.75p and am currently wondering if I am being greedy not cashing in and trying for growth with another company.
Contemplated setting the stp loss a little higher but the chart at the moment gives no clue as to a support level having risen so sharply.
These statements are made from a naive standpoint as I am still befuddled by the mass of information avilable and the many ways it can be interpreted. I do keep coming back though to the unarguable fact that 57% profit net of costs is pretty healthy in todays market!
Again when I look at the trades today I see sellers are leading the way. Have we not seen pxc reach its peak in the short to medium term?

Kram
I'm pretty much a novice at trading but have held PXC since September at 6.7p and like you, the little experience I've had tells me that non stop profit making is unrealistic - however, I've decided not to cash in at 11p (means 25K to me in profit!) because all the projections of future growth and recommendations to buy look good and the danger in taking the money and running now are that it is not easy getting the timing right on when to get back in; or making the assumumption the rises will now stop; I sold RTD for
16.5p because of my belief the rises could not continue and there would be a fallback but it continued up to 21p and I felt pretty sick - no hard and fast rules in this game, the one thing I DO know is that you can predict that prices are UNpredictable..........not much help because the truth is no one really knows...

PIPEX COM the company and the nature of it new business strategy has not even started to kick in, when you acquire a business in the real world you would formulate 3-5 year strategy...PIPEX Is no different...worth thinking about...

imagine the share price as the company builds up through profitability/cash/organic growth/aquisitions......?????

Just some thoughts - After the recent rise it was only a matter of time before some profit taking was bound to happen, still the trades do not seem that bad, we will have to see what happens Wednesday. jules99 is right this is still a good long term bet and as most of us have been in this one for some time and made good money, the call will always be when to cash some profit. The eoy report is still to come and I think it will be better than expected and push the price up. As you said it is only a young company that has been able to achieve alot in a short term. Still think 13 - 16 is the next target and the shares may trade at 10 - 10.25 if buyers do not return to support, below this would require some consideration.

seems; Once all selling is done by weak holders, should see it move again...MM's just creamimg out panic sellers at 10.75p...

Appreciate the balanced feedback from all posters.
Fundamentally I agree with the sentiment that pipex has a long way to go and that this could be the beginning of a fruitful couple of years. I suppose because I am investing comparitively small amounts I am trying to maintain momentum so that I can accrue a decent stake and build from there.
I know its early days for pxc and for now I will hold. Still confused though at the apparently huge volume of sales compared to buys.....

The sales are natural as many people have held a position in GXN/PXC at sub 8, 6 and 4p levels - therefore it is natural to see those buyers realise their paper based profits.

MAY PICK UP A FEW BEFORE CLOSE AT 11P, HAVE A FEELING DOW, NAS WILL ALSO START TO RECOVER FROM LAST FEW DAYS SELL-OFF FOR CLOSE OF WEEK...what goes down must come back at some point..

Well lots of sells today still clearing out the takers lets see what Friday brings and the total sell / buys for the week.

Stick with it. Look at the chart over the past six months. It pushes up a lot and then pulls back a little. In the long term I strongly believe this is only going one way. This company has put in place some very good strategic components for great success.