Can BroadVision's Stock Price Continue to Rally?
Shares of BroadVision (NASDAQ: BVSN) are up nearly 150% in the last week. The company is trading at or near its 52-week high and has seen extremely large volumes of trade recently. Is this trend here to stay or is it just market noise?
BroadVision is an Internet software and services company that develops personalized portals based on the specific needs of its clients. The clients then use these portals to share documents and other required information, discuss specific cases, and keep in touch.
The company was founded by Dr. Pehong Chen in 1993, and is currently headquartered in Redwood City, California. Dr. Chen – a University of California, Berkeley graduate - has been Chairman of the Board, CEO and president of BroadVision since its inception. Currently, the company has 160 full-time employees and has operations in every continent except Australia and Antarctica.
BroadVision introduced its first eCommerce and portal products in 1995, during the Internet's infancy. The company went public on Nasdaq in 1996. Later that same year, the company began designing portals according to the needs of each client, and added more personalization features. With the business world moving to the Internet, the need for personalized organizational software kept expanding, and BroadVision profited from this.
In 2000, BroadVision acquired lnterLeaf, one of its chief competitors. It also launched QuickSilver, a high-end document publication tool. In 2006, it started tapping emerging markets with the launch of BroadVision Clear, a human resources management solution designed specifically for the Chinese market. Then, in the summer of 2010, it came out with Clearvale, a cloud-based network for mobile, virtual and solution enterprises.
Recently, SoftBank Telecom Corporation - which is located in Japan - adopted BroadVision's Clearvale Passport platform for its 21,700 employees. This $30 billion telecom giant also decided to offer Clearvale for its customers on mobile devices, further increasing BroadVision's consumer base.
Thanks to such developments, Clearvale is now being compared with other top-tier business networking platforms developers like Jive Software (NASDAQ: JIVE), which has a market capital of $894.26 million. Meanwhile, BroadVision has a market capital of only about $150 million dollars, and will need to grow quickly if it is going to make such comparisons stick.
During the past couple of weeks, BroadVision's stock price has scaled new heights. The stock, once $12 a share, has gone as high as almost $34 a share. Though the company's sales have been growing and are expected to keep growing, the company has had difficulty posting profits.
The company's rise can be attributed to a position taken by the National Inflation Association (NIA), an organization run by notorious pumper Jonathan Lebed. The organization has sent many newsletters to its subscribers over the past few weeks touting the company's potential as a result of the impending Facebook IPO.
The NIA has taken a fairly large position in BroadVision of over 150,000 shares and has stated in its newsletters that it is currently in a holding pattern, unable to sell its position until February 12, 2012.
Thankfully, the company's revenue has been increasing. The company generated total revenue of $4.2 million last quarter, compared to $3.9 million dollars the quarter before that. The company also improved its cash reserves, with cash holdings of $2.5 million at the end of September, 2011, up from only $0.25 million the previous quarter.
BroadVision, like most of its peers, is completely debt free. That makes investing in company somewhat less risky. However, on the other hand, the company tends to pay more in taxes that its peers, failing to make effective use tax shield benefits. That means less money for shareholders.
Going into the future, analysts are anticipating better sales and revenue figures for BroadVision, which should help the company to get back to its old profit making ways. These expectations have fueled the dramatic increase in BroadVision's stock price. With the exponential 200-day moving average line looking primed to cross the 200-day moving average line, yet another jump in the stock price could very well be in the cards.
The market has already taken into consideration the cash flows the ongoing projects of BroadVision might generate and has accordingly priced the share. The company will need to keep up with sales expectations and continue to reduce operating costs to sustain its current price.
There is a lot of competition in the virtual world and survival is difficult.
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