Investor's Champion Blog
Provides refreshingly forthright, independent comment on predominantly small cap companies and specialist investment funds. Informed opinion, based on first-hand research, but pulls no punches in exposing management weaknesses.

Atelis - great product (terrible share price) but can they commercialise it

I met with the management of Atelis ('ATEL') earlier today, a somewhat disastrous AIM new issue in which I participated back in May 2006.

I have seen the share price fall from the issue price of 20p to today’s current level of c6p-not my best, by any stretch.

However, notwithstanding the problems encountered by this small Israeli based technology business it seems to have interesting technology that should be all the rage. Here is an extract from the admission announcement which describes it:

The Company has written a range of software applications that create what is
known as a "Softswitch", that is able to replace traditional switchboards and allows telephone calls to be made and received over the Internet. Atelis' solutions provide the full functionality of a normal telephone exchange but at a significant cost saving to the customer. This means that Atelis' range of software products allow customers to benefit from the cost savings derived from Internet telephony.

Market research suggests that the number of corporate telephone lines that use
Internet telephony will leap from 4% in 2004 to 44% in 2008 and that corporate
spending on Internet telephony will rise from $1 billion in 2004 to $5.5 billion
by 2008.

Atelis appears to have the product but having clearly used all of the money it raised at float it hasn’t got anything left in the bank to support ‘rapid’ commercialisation. From the gross proceed of £1m I sense that only something like half went into the company and when you are in the same space as the likes of Cisco and other big equipment boys this clearly isn’t enough.

Senior management haven’t even been paying themselves for the past few months which-never a great scenario for a quoted business!

But good luck to them. I hope they get a break and find some quality resellers to push what appears to be an interesting product that the customer should be crying out for.


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