New contract further endorses Etherstack’s global profile
Hey! Looks like you have stumbled on the section of our website where we have archived articles from our old business model.
In 2019 the original founding team returned to run Next Investors, we changed our business model to only write about stocks we carefully research and are invested in for the long term.
The below articles were written under our previous business model. We have kept these articles online here for your reference.
Our new mission is to build a high performing ASX micro cap investment portfolio and share our research, analysis and investment strategy with our readers.
Click Here to View Latest Articles
Wireless technology company, Etherstack (ASX:ESK), has followed up an important announcement last week regarding the award of a contract with news that it has been chosen by global structures and logistics group, ATCO Electric, to provide additional sites and capacity for a mission-critical radio communications network supporting its electricity distribution and transmission operations in Alberta, Canada.
It is worth noting that ESK’s share price increased from 21.5 cents to hit a high of 28 cents last week following the announcement in relation to the digital radio network expansion order, representing an increase of 30%.
However, this is a speculative company and potential investors should not base investment decisions on prior share price performance. Investors considering this stock for their portfolio should seek professional financial advice.
From an operational perspective it is important to understand that ESK’s APCO P25 network solution has been deployed in the ATCO electrical network since 2010 with ESK providing support over the last five years.
Repeat business testament to ESK’s technological and service ability
Contract extensions have been a hallmark of ESK’s operational progress over the years, which in itself is an endorsement of its efficient performance, as well as being a pointer to the company’s prospects of winning new work and repeat business.
The first phase of the new expansion contract is planned for delivery in the current financial year and is expected to contribute to fiscal 2016 revenues.
Recurring revenue model provides income visibility
Looking at ESK’s broader revenue model where technology licensing is involved, contracts such as these provide important income visibility as clients typically pay recurring royalties on sales of products shipped under their own brands, and long royalty tails are typically between seven years and 10 years for the lifespan of a client’s product line.
ESK’s Chief Executive, David Deacon said the current deliveries, additional phases and recurring support revenues are expected to generate approximately US$3.1 million in total over the next 4 to 5 years depending on the final network rollout plan.
From an operational perspective, this is a significant development for the company given that it involves the full deployment across 80 sites in the Alberta Province.
Establishing a strong presence in the essential services electrical utilities industry
It is also a further endorsement of the group’s technology as it comes on the back of a multi-million-dollar order to deploy a greenfield 900 megahertz P25 digital radio network across 13 counties in New Jersey for First Energy’s Jersey Central Power and Light subsidiary.
ESK boasts a particularly impressive client portfolio across the government and commercial sectors as can be seen below.
Summing up the importance of this new contract win in the context of the company’s broader promising performance in 2016, Deacon said, “2016 has seen ESK win important new and repeat business in the electric utilities sector, and it reflects well on our global reach and ability to win and deploy complex communications networks around the world that form part of the essential services of our communities”.
General Information Only
S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.
Conflicts of Interest Notice
S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.
Publication Notice and Disclaimer
The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.
Any forward-looking statements contained in this article are not guarantees or predictions of future performance, and involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results or performance of companies featured to differ materially from those expressed in the statements contained in this article. S3 cannot and does not give any assurance that the results or performance expressed or implied by any forward-looking statements contained in this article will actually occur and readers are cautioned not to put undue reliance on forward-looking statements.
This article may include references to our past investing performance. Past performance is not a reliable indicator of our future investing performance.