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VICOM INC. (NASDAQ: VICM) |
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SPECIAL ALERT! Unique Opportunity in Unified Telcommunications Services
Reasons to Consider VICM: |
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VICM's MultiBand subsidary has a very attractive service offering in an enormous and growing $6.0 Billion telecommunications market niche |
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VICM's market niche, privately owned and managed digital satellite television, high speed internet, and telephone services, for apartment complexes is expected to grow at an annual rate of 20% |
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VICM's low cost infrastructure provides a high return on invested capital |
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VICM's MultiBand model is highly scalable and provides a strong recurring subscription revenue stream |
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VICM appears to be undervalued at current price levels |
About VICM's Business
Vicom, Inc. is the parent corporation of two wholly owned subsidiaries: Corporate Technologies, USA, Inc. (CTU) and MultiBand, Inc. (MultiBand). CTU provides voice, data and video systems and services to business and government. MultiBand provides voice, data and video services to residents of apartment complexes.
MultiBand, Inc.
In the third quarter of 2000, the VICM expanded its strategy to include the vast potential of the multi-dwelling unit (MDU) market by leveraging its expertise in designing, building, and maintaining communications networks. VICM's experience in this market suggests that apartment complex owners are looking for a reliable solution to provide residents that desire digital television signal, competitive access for local and long-distance telephone and high speed Internet access. MultiBand provides all these services to the apartment complex residents and allows for the owners of the apartment complexes to meaningfully participate in these telecommunications revenue streams that their tenants generate.
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MultiBand launched its Watch.Talk.Surf product in Oct. 2001 |
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Watch.Talk.Surf provides "instant-on" access to telephone, internet, and digital satellite television services |
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Better than industry average response times |
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Total no. of subscribers in June 2002: 853 in 8 buildings |
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Average revenue of $1,020 per subscriber per year |
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Average cost to "wire" a single dwelling: $1,000 |
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Current potential market value per subscriber: $4,500 (Comcast purchase of AT&T Broadband) |
While the market for providing voice, video, and data services to MDUs is competitive, the differentiating features of MBI's service offering have been well received by building owners looking to attract new tenants and participate financially. VICM's MBI has developed a business model that offers building owners a potentially lucrative revenue and profit sharing arrangement.
Corporate Technologies USA
CTU is a leading provider of a full range of voice, data, and video communications systems and services for commercial customers. CTU is one of the larger companies (which are commonly referred to as "interconnects") in this business. VICM's CTU purchases equipment from a variety of manufacturers of communications and electronic products and then designs and installs systems to fit its customers' specific needs.
CTU had been growing rapidly over the last several years until the weakening in the telecommunications sector in 2001. Even with a 20% decline in revenues over the past year, CTU revenues have grown at a compound annual growth rate of nearly 70% over the last three years. A large portion of the growth has come from acquisitions.
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Valuation and Conclusion
With the entire telecommunications industry in the doghouse over the collapse of some high flyers, some smaller companies with good business models have been dragged down with the market. This presents a unique potentially profitable opportunity. We believe that VICM can represent one such opportunity. When valued on a "sum of the parts" basis we believe that the market has significantly undervalued VICM.
Valuing VICM's CTU Business
When we look to value VICM on a multiple of revenue we note that VICM is trading at only 0.5 times trailing 12-month revenues, substantially lower than the 1.4 times multiple given five comparably publicly-traded companies (NRRD, CPTL, NETX, TLGD). Like, VICM, all but one of these companies were unprofitable during the previous four quarters. If we assume a conservative 0.57 times multiple of trailing revenue (a third of the industry multiple) and apply it to only the CTU side of the business, that alone should yield an enterprise value of at least $15 Million.
Valuing VICM's MBI Business
The market has given little consideration to the MBI portion of the business, which is expected to provide the bulk of VICM's future growth. We believe that the 2,000 homes currently passed by MBI and the roughly 35,000 potential customers represented by the building owners that have indicated interest in MBI's services should provide considerable future value to the Company and its shareholders.
Based upon a market value per subscriber in the $4,500 range, (the value per subscriber recently offered by Comcast of AT&T's broadband operations), and assuming that VICM's MBI business is only able to enroll only 1/3 of the its current prospective customer, the resulting enterprise valuation for VICM's MBI business is $18.5 Million ($4,500 X 1/3 X 37,000).
Conclusion
When we assign VICM an enterprise value to its CTU and MBI businesses of $15 Million and $18.5 Million, respectively and $33.5 Million combined, the per share enterprise value of the combined concern is $2.74 per share. After adjusting for debt and cash on the balance sheet, the estimated value of the Company is approximately $2.54 per share, an approximate 400% increase from its current level of $0.60 per share.
As VICM continues to strengthen its market position in this emerging sector, now may be the time to consider VICM as an investment opportunity.
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*** IMPORTANT NOTICE and DISCLAIMER PLEASE READ ***
Tomorrow's Stock Today (TST) publishes reports providing information on selected companies that TST believes has investment potential. TST is not a registered investment advisor or broker-dealer. This report is provided as an information service only,and the statements and opinions in this report should not be construed as an offer or solicitation to buy or sell any security. TST accepts no liability for any loss arising from an investor's reliance on or use of this report. An investment in VICM is considered to be highly speculative and should not be considered unless a person can afford a complete loss of investment. TST has not been hired by Vicom, Inc. to do this profile and did not receive any compensation, of any kind, from or on behalf of Vicom, Inc. (VICM) for this profile. TST has contracted to receive one hundred thousand shares of freetrading stock at a discount to the current market price and one hundred thousand warrants to purchase stock at $1.00 per sha!
re. TST and/or its affiliates or agents have not discussed this profile with the management of VICM. Subsequently TST may buy or sell shares of VICM stock in the open market. This report contains forward-looking statements, which involve risks, and uncertainties that may cause actual results to differ materially from those set forth in the forward-looking statements. For further details concerning these risks and uncertainties, see the SEC filings of VICM including the company's most recent annual and quarterly reports.
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