Last Thursday night, I listened to a presentation by incoming Radvision (Nasdaq: RVSN; TASE: RVSN) CEO Boaz Raviv at a growth companies conference in New York organized by the Needham & Company investment house. After his super-optimistic presentation, I understood why the share spurted to a $19 peak on huge turnovers last week. The share hasn’t been that high for five years. No acquisition rumors are involved; the reason is a chance of a major revolution in two of Radvision’s giant markets. If such a revolution occurs, it will catapult the company to previously unseen heights. In his lecture, Raviv referred to these markets more than once as “two impending hurricanes.”
As of now, Radvision makes a very good living from two cash cows. Its technology unit has annual sales of $20 million and a high profit margin. Raviv managed this unit when he came to Radvision several years. The other unit is a networks unit, which has boosted the company’s sales to over $70 million a yea. The company’s profit per share is expected to reach $0.62 in 2005, more than double the previous year. A large continuing contract with the US Department of Defense, in cooperation with Cisco Systems (Nasdaq: CSCO), contributed to Radvision’s surprising third quarter results, and will continue contributing in the coming quarters.
The hurricanes that Raviv is talking about are in the enterprise communications and 3G communications deployment by service providers sectors. Microsoft (Nasdaq: MSFT), which works very closely with Radvision on technology for video conference calls, is making every effort to bring video conference calls applications out of boardrooms in which they are installed, and into every employee’s desktop computer.
If Microsoft succeeds, it will multiple Radvision’s sales many times at all enterprises. Instead of its technology being installed in a limited number of boardrooms, it will be installed on every computer -- a potential of hundreds or thousands of stations, depending on the size of the enterprise. For Microsoft, this kind of thing is routine, but for Radvision, it’s a hurricane.
Raviv believes that the second giant wave of sales will come from wireless operators when video communications applications on 3G telephones are launched. He says that these two revolutions have already been implemented at Radvision itself. A video camera has been installed in every desktop computer, with software for video communications between all employees, who have also been given 3G phones. Ordinary phone calls are a thing of the past at Radvision. The more enterprises adopt such communications, the faster the revolution in Radvision’s business will arrive.
Published by Globes [online] - www.globes.co.il - on January 17, 2006