Player Avatar TMFEnochRoot (99.79) Submitted: 8/25/2006 4:56:13 AM : Outperform Start Price: $2.74 WYY Score: -77.01

Shot in the dark and I may look back at this and admit that it didn't pass the sniff test to begin with, but if you listened to the last qtrly call you heard some perhaps unbelievable claims about what WDPT's revenues are about to look like.

New gov't regulations have been adopted that require pretty much anyone working with gov't systems to have the digital certificates these guys sell, otherwise they are unable to login to gov't systems. Widepoint, Verisign, and DST are the only firms authorized to create and sell them. Widepoint claims to be the #1 player with Verisign #2.

WDPT claimed in their last call that they are participating in RFP's that total 3 million credentials this year, with another 2 million expected to come behind shortly. They are valid for 1 to 3 years and must be renewed. They are currently sold at an average price of $100 per certificate for 1 year, and are a recurring revenue stream for these guys. They are extraordinarily high margin, WDPT claims they are currently staffed and ready, with 75 employees and SGA of under 4 million, to handle 1.5 million orders, which coincided with the "majority" win-rate they expect from the immediate RFP opportunities. The 100 dollar credentials make up a large majority of the order, but a substantial minority are server certificates going for 400 a pop.

Overall if mgmt claims are realistic revenues should rise to 150 million+ annually. WDPT trades under 1X this sales level, and under 5X EV/EBITDA using Veris

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Member Avatar TMFEnochRoot (99.79) Submitted: 8/25/2006 4:57:36 AM
Recs: 2

using Verisign's margin structure as a proxy.

You guys REALLY need to do something about pitch length, either fix it or provide some warning, PLEASE!!!

Member Avatar TMFEnochRoot (99.79) Submitted: 9/1/2006 8:38:31 PM
Recs: 0

Just a quick note to add that it's not great to see the COO and Chariman, among other insiders, selling shares on the cusp of a supposed massive surge in revenues. One more reason this is a CAPS flyer and not a real worl position.

Member Avatar TMFEnochRoot (99.79) Submitted: 10/13/2006 9:32:48 AM
Recs: 2

Keeping all two of my readers up to date ;-) A registration statement has been filed and approved by the SEC allowing for the sale of 17 million shares by institutional holders. Barron Partners, the largest shareholder in WYY, is at the top of the list, but other institutional owners are also included in the statement. These filings are SOP for company's that have had a lot of equity financing, so no huge concerns, but there are two reasons to see this as a negative sign:

1) Like the mgmt stock sales earlier this month, it is not great to see company insiders making moves to sell stock on the cusp of what mgmt is touting as a huge upsurge in (profitable) revenue.

2) 17 million shares reperesents about 30% of the total shares outstanding and about 6 months worth of daily volume, and if it all came to the market would surely cause an overhang that would depress the stock while sale was ongoing. For buyers of course this would represent a nice opportunity, but large blocks of restricted shares coming to market usually is seen as a negative for the stock, and this one is huge relative to the liquidity of the shares.

Member Avatar TMFEnochRoot (99.79) Submitted: 6/5/2007 11:42:00 AM
Recs: 0

Yeah, so this didn't work out too well did it? WYY reported ~2.7mm revenues for the most recent quarter, a pretty far cry from the $150mm type numbers management was touting a year ago. I'd say I was snookered on this one, but I really have no one to blame but myself. As I stated in my original writeup there was a pretty distinct possibility that I would look back and admit that the original claims didn't pass the sniff test to begin with. I would close this pick as have no reason to believe results will improve from here, but I'm leaving it here as a reminder to myself to stop and think about what can realistically be accomplished when management starts making outrageous claims about future opportunities.

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