In an increasingly digital, networked environment, sharing information without compromising security is of utmost importance. A key technology for achieving information security in communications, computer systems and electronic commerce is Cryptography.
Cryptography is the science of converting data into a scrambled code, hidden from all but authorized viewers, that can be decoded and sent across a public or private network. Let's take a look at one of the companies providing secure communications solutions, which recently graduated from the OTC Bulletin Board to the Nasdaq - Technical Communications Corp. (TCCO)
Founded in 1961, Technical Communications rolled out its first encryption product in 1969. The company has since added a number of products to its quiver. Technical Communications' products, which are in use over 115 countries, are used to protect confidentiality in communications between radios, telephones, facsimile machines and data processing equipment over wires, fiber optic cables, radio waves and microwave and satellite links.
The company's clients include foreign and domestic governmental agencies, law enforcement agencies, financial institutions, and multinational companies requiring protection of mission-critical information. Technical Communications' secure solutions are also used for private and personal use, after all communicating in confidence is for everyone concerned with privacy and is not just for governments or companies.
Technical Communications sells its products directly to customers, original equipment manufacturers and value-added resellers using its in-house sales force as well as domestic and international representatives, consultants and distributors. However, the company seldom has long-term contractual relationships with its customers.
A look at the company's financial performance over the past five fiscal years from 2005 through 2009 shows that revenue has grown at a CAGR of 20%. Technical Communications, which incurred losses in 2005 and 2006, has been in the black in the successive years. The company's fiscal year ends September 26.
In the nine months ended June 26, 2010 net income soared to $4.69 million or $2.72 per share from $708 thousand or $0.43 per share a year before.
Sales for the nine months of fiscal 2010 totaled $14.69 million, up from $5.98 million in the comparable year-ago period, thanks to the extraordinary sales volume generated by deliveries of its Encryption Systems currently being deployed in Afghanistan.
Domestic sales accounts for 95% of the total sales, while foreign customers account for the remaining. Among its foreign clients, Saudi Arabia is the major customer with 56.4% of the company's foreign revenue, followed by Thailand's 22.6%, while Colombia, Slovakia and others account for single-digit percentages.
Afghanistan is one more region where Technical Communications' products, particularly its radio encryptors, are being deployed. In Afghanistan, the country's security forces have been continuing their efforts to strengthen their internal security and provide effective and secure communications.
This April, Afghanistan placed orders valued at about $9.7 million for Technical Communications' encryption equipment to provide secure national communications. The deliveries are scheduled to be completed in the fourth quarter of 2010 and are expected to result in record revenues for fiscal 2010.
As recently as October 19, the company again received an order valued at about $3.7 million for further expansion of its encryptor deployments in Afghanistan. Deliveries for this order are planned to be completed in fiscal 2011.
Driven by customer demand for its encryptors, the company is evaluating several technical options for enhancing its product line and expects to maintain its increased investment in internal product development. A new family of high performance encryptors are in development and are expected to be launched in the coming months.
In February of this year, the company declared a special one-time dividend of $2.00 per share of common stock outstanding. Wanting to share its fortunes with its shareholders, Technical Communications implemented a quarterly dividend program in the third quarter of fiscal 2010 , declaring a dividend of $0.10 per share. The current annual dividend yield is 3.6%.
The company is scheduled to report financial results for the fourth quarter and fiscal year ended September 25, 2010 on December 13, 2010 before the market opens.
Shares of Technical Communications, which have gained over 22% in the past one month, is currently trading around $11, and is above its 20-day, 50-day and 200-day moving averages. The stock has touched a low of $3.60 and a high of $14.68 in trading thus far. TCCO is a thin volume stock with a 3-month average trading volume of just 6,361 shares. Since this is a stock with very low average daily volumes, it is susceptible to higher volatility. The company has just 1.8 million shares outstanding, giving it a market cap of $20.2 million. |