Knobias Clip Report (4-21-2008)
Submitted By Knobias ClipReport
TCCO: Announces $57.5M Army Encryption Contract, Shares Jump 10.5%
Monday’s session got off on the wrong foot as Bank of America reported first quarter earnings that fell short of expectations. The report stifled the tech rally which began last week on stellar reports from IBM, Google, and others.
Following the Bank of America report, the dollar weakened again, furthering the gold rally, and helping lift oil prices to new highs. Other reports of disruption from Yemen and Nigeria also acerbated the oil rally. But the bad news in the financial and commodity front could hold down the techs the entire day as the Nasdaq gained 4.58, while the Dow bumped off support in the 12,750 area and closed at 12,825.
In the small cap tech space another company reported some fairly positive news. Technical Communications Corporation (TCCO) designs, manufactures, and supports superior grade secure communications systems that protect highly sensitive information transmitted over a wide range of data, voice and fax networks. TCC’s security solutions protect information privacy on every continent in over 110 countries. Government agencies, militaries, financial institutions, telecommunications carriers and multinational corporations worldwide rely on TCC to protect their communications networks.
In today’s world, the Company’s products are obviously in high demand. With the advent of wireless, additional measures of security are needed to ensure safe communication. Reports of hackers pulling up to a local supermarket and plucking credit card numbers out of thin air are becoming much too commonplace.
With the military efforts in the Middle East, the need for security is even more apparent. With the hacker stealing credit card numbers, the worst that could happen would be a drained bank account. With the military, the worst that could happen would be the loss of soldiers. It’s a big difference and the reason that the military takes the much needed steps for additional security.
On Monday, the Company announced that it was awarded a US Army contract for encryption equipment to be delivered to the government of Egypt. The contract was reportedly worth approximately 5.75 million and will be delivered over the next eighteen months.
To put the contract in context, the Company reported their first quarter earnings in February. Net income was $752,000 or $0.54 per share, on revenue of $2,289,000, as compared to a net loss of $(117,000), or $(0.09) per share, on revenue of $762,000 for the quarter ended December 30, 2006.
Commenting on corporate performance, Mr. Carl H. Guild, Jr., President and Chief Executive Officer of TCC said in the press release, “I am very pleased with the continued, strong performance of TCC during the first fiscal quarter of 2008. Revenues were driven to an exceptionally high level by a robust demand for our DSP9000 radio encryption products and a requirement for an expedited deployment to Afghanistan. Our encryptors are used in conjunction with a wide variety of radios to provide broad-area interoperable secure communications. As we have reported before, the DSP9000 system is unique in that it creates an end-to-end secure voice network between vehicle, man-pack, aircraft, ship and commanders’ offices using a wide variety of radios. We believe the DSP9000 Radio Encryptor System is ideally suited for the military communication requirements in Southwest Asia, South America and Africa. During the first quarter, additional orders were received for DSP9000 products for both Asia and Africa, contributing to the total backlog at the end of the quarter of more than $3,200,000. The current DSP9000 orders are expected to be delivered during the next nine months at quarterly levels lower than those delivered in the first fiscal quarter.”
Mr. Guild continued, “Our Network Systems product line shipped thirty eight IP (internet protocol), Frame Relay and Link encryption systems to a middle-eastern customer for deployment in their naval and ground communications systems. This equipment is part of an ongoing expansion of existing satellite-routed systems secured by TCC encryption equipment. We continue to aggressively pursue both government and private network communications opportunities which require the high-grade encryption security that TCC provides.”
With continued deployment of their encryption systems and maintenance of their healthy margins, the Company is certainly one to watch over the coming months.
