A new report from Ovum supports this view. Analyst Matt Walker pointed out that smaller companies such as Mitel are the industry’s game-changers – but they need money to carry out their promise.
Indeed, after Mitel’s IPO came in at $147 million instead of the hoped-for $180 million, the Canada-based company pulled off a tidy fourth-quarter profit. Mitel reported its numbers on June 30 and investors turned up their noses, even though Mitel boasted a $22 million net income compared to a loss of $252 million a year earlier.
Investors' reasons for ignoring this turnaround were unclear. Sure, Mitel’s sales fell somewhat – by 4.4 percent to $163.9 million – but whose haven’t in this rough economy? Shareholders also should have cheered Mitel’s forecast for the current quarter – higher revenue and another round of profits. Mitel says it should record between $163 million and $167 million in sales in the quarter ending this month; analysts polled by Reuters Knowledge expect revenue of $162.2 million. Even if Mitel matches its sales totals from the fourth quarter, flat has become the new up. Sustaining revenue as the global economy crawls toward recovery would be an impressive feat.
On top of the decent figures, Mitel just received Frost & Sullivan’s New Product Innovation award at a time when some are questioning whether telecom innovation is dying.
The fact is, Mitel looks better-positioned than some of its big rivals – think Cisco Systems Inc. and Alcatel-Lucent – because it lacks the bureaucracy that seeps into giant organizations. The company's startup culture frees workers to focus on innovation. And with a stockpile of cash and less debt on the books, Mitel can plow ahead with work on its mobility and virtualized call control platforms.
Once again, Wall Street is fixating on quarter-to-quarter fluctuations and failing to see the complete picture of a company. As Mitel pushes forward with R&D and customer wins, the telecom industry will see just how smaller, scrappy and innovative players can move the market.
