3SOF

QuoteChart Update:
Nothing to comment, GSB was down 6% last Friday and now up 6%, volume remains low, and the chart doesn't say much at this point.

Yep, the chart doesn't say much when you're looking at low volume micro cap stocks, as the technical picture can change very rapidly when volume kicks in. GSB is the type of stock that may very well have 100% upside days (or a 50% decline in just four days ), if the right news is published at the right time.

My long term investment perspective on GSB is quite simple. Management is committed to keeping a 25% net profit margin over the long run and I see revenue CAGR of 75% over the next three years or so (with 60% "organic" growth and the other 15 pp coming from positive "surprises", like more Department of Defense orders or any business coming from the partnership with Synteras).

If we consider the company's $20 M revenue guidance for 2007 and my 75% revenue CAGR estimate, 2010 revenue will be $107.2 M. Applying a 25% net profit margin we get $26.8 M in net income. GSB belongs to an industry which has been highly valued by the market (take VDSI or RVBD as examples), so let's apply a 30 times earnings multiple to this net income and get to a market cap of $804 M for GSB in late 2010.

That's 11 times more than the current market cap of $70.7 M

Forget the short term swings, just buy and hold GSB. 

The CEO said, at the latest conference call, that management wanted to go North to ring the AMEX bell, and here they go:

• GlobalSCAPE to Ring Opening Bell at the American Stock Exchange
Business Wire (Wed 8:00am)

The man does what he says and has been delivering on all his promises. Interestingly enough, he gave us a clue on this press release:

"Since GlobalSCAPE's listing on the AMEX stock exchange, which occurred on July 19, 2007, we have seen great success in a short amount of time. We look forward to our continued success and sharing our story with a much larger group of investors."

Great success since July 19, 2007. However the stock price is about 20% below that day. Is the market telling us something here? Not at all, in my view, the market has been very inefficient pricing GSB, just note its insane swings. My take is sellers around current levels don't have a clue of what they're doing ... they look at the chart and buy and sell according to their "visions". Longer term they're just noise producers, without much material impact on the course of events.

Over the longer term, fundamentals, which are very attractive as you can see from reading this thread or just analyzing the financial trends and prospects, will prevail.

The CEO gave us a clue, but almost nobody saw it as volume remains low.

GSB is one of the stocks where I see the most potential in the Main Portfolio, nothing technical will shake me out of this wonderful technology story. I'll continue holding GSB.

anyone has 100k they can lend me so I can buy some GSB? 
I am only kidding by the way. 

check this out guys.
I'll spare you guys the entire post, but this is what I got from VV on GSB

Value GSB has a current value of $8.33/share.
RV (Relative Value) GSB has an RV of 1.55, which is excellent on a scale of 0.00 to 2.00
RS (Relative Safety) GSB has an RS rating of 0.88, which is fair on a scale of 0.00 to 2.00
RT (Relative timing) GSB has a Relative Timing rating of 0.74, which is poor on a scale of 0.00 to 2.00
VST (VST-Vector) GSB has a VST rating of 1.07, which is fair on a scale of 0.00 to 2.00
Recommendation GSB has a sell recommendation 
Stop-price GSB has a stop of $3.90 which is its current price.
Earnings to Growth Rate GSB has a forecasted earnings to grwoth rate of 29.00%, which is excellent
EPS forecast on GSB is at $0.32 for the leading 12 months.
P/E GSB has a P/E of 12.19
EY Earnings Yield GSB has an EY of 8.22%
GPE Growth to P/E ratio GSB has a GPE rating of 2.39. With long-term interest rates currently at 5.89%, the operative GPE ratio is 0.35. Therefore GSB may be considered to be undervalued.
Sales Growth GSB has a sales growth of 162.00% per year. this is excellent

ok I'll take 10%. just lend me 10k so I can buy some more GSB   

Quoteok I'll take 10%. just lend me 10k so I can buy some more GSB  

Hehe, if I were you I wouldn't invest with borrowed money, not even in GSB, which is a fantastic company.

I'm sure you know that's a computer generated analysis, which has several flaws. For example, the results are heavily influenced by GSB's latest quarter, which we know was impacted by what can be considered a one time big order (this is part of the reason the stock came off after the good news).

The good news for the future is that probably there will be more orders like that DoD order and just organic, internal growth is enough to support a much higher share price in my view.

GSB has a new CFO:

• GlobalSCAPE Announces New Chief Financial Officer
Business Wire (Fri, Sep 7)

I don't think the news should have any impact on the share price.

I'll keep holding GSB for the long term.

GSB fell 5% on Friday, rose 5% on Monday. These changes mean absolutely nothing for the future, they're short term "noise".

Fundamentally, for 2008, I see $40 M revenues and $10 M net income, which should put the market cap north of $200 M. Currently GSB's market cap is $70 M.

I'll keep holding GSB for the long term.

GSB is a powerful long term growth story. In 2003 the company posted ($0.05) EPS. In 2004, $0.01. In 2005, $0.10 and 2006 $0.13.

In the first half of 2007 GSB already posted $0.14 EPS, and a research firm covering the company expects $0.26 EPS for the full year. GSB should be valued at least at 30 times earnings, considering other company's valuation operating in the same field, like RVBD. That means GSB should close the year around $7.8.

And for 2008? Well, for 2008 I expect $10 M in net income, which translates into about $0.54 EPS ... apply the same 30 times earnings multiple and get a $16 share price.

I'll keep holding GSB for the long term.

GSB has a management that, sooner or later, delivers on its promises. First it was the big DoD order that never came, but after some time, it happened. Then, the AMEX listing promise, which was also delivered ... many OTCBB companies make this promise, but most fail to turn it into reality. 

So GSB's management earned my long term trust. I believe the company will grow revenues by 75% a year and it will enjoy a fat net profit margin of 25% over the long term. And this makes GSB an extraordinary micro cap pick which still didn't materialize in a sharply higher stock price. But as GSB's management promises, it will, it will. 

GSB has an habit of anticipating good news ... I don't know if the 4.9% advance yesterday, on higher volume, means something is about to be released or not, but there have been several hints that good news can hit the wires anytime now.

I guess Terliso will be back to GSB soon

Another positive day for GSB, with volume still low but rising. I'm feeling there's some positive press release on the horizon ... let's just hope the "buy the rumor, sell the news" isn't as strong as in the past, especially the "sell the news" part.

I'll continue holding GSB for the long term.

opening bell ring belling video plus interview at the end:
http://www.amex.com/?href=/atamex/news/events/2007/br_GSB_091007.htm

from RB:
New software link on Globalscape homepage

Looking at their Home Page, I noticed we have a new link that wasn't there before, to the Availl CDP (continuous data protection) software (http: //www.globalscape. com/cdp/). That means the CDP software is up to Globalscape standards now, obviously. Furthermore, that also means another revenue stream linked up and being promoted both online as well as directly by the sales team.

During the last conference call, we were told Globalscape is going to release three WAFS features this quarter and early next quarter. This is the CDP software; WAFS was the first link to go up on the Globalscape home page. (I'm looking at a copy of the website from July 10, 2007 and see WAFS, but no CDP.)

Here's something from the conference call:

From the opening presentation on WAFS:
"Even though our Wide Area File Service, WAFS product, acquired with Availl, has not yet reached the revenue level we expect.

As our engineering team continues to bolster the products' core capabilities, and marketing implements new programs to penetrate the market, we believe our WAFS revenue expectations will be reached. We'll be adding three (3) new WAFS features later this year, and we believe that these additions will get us to the revenue levels we expected six months ago. I have to keep reminding myself that the acquisition is only nine months old."

From the Q&A Session:
"The Availl product still continues to excite us just as much as it ever did. I think that it is fair to say that maybe I was a little naive in not recognizing that two completely different coding schemes presented problems. We were not happy with the performance of Availl as it related to Globalscape's standards, and did a lot of homework in trying to bring that thing up to speed. And it just simply has taken longer than we thought. We have gone through the process of getting our engineers much more familiar with it, and getting involved. And right now, as I said earlier, I believe that we're in great shape. I believe that the three additions that we'll be announcing in this quarter and early next quarter will get us to the point that we thought we would be."

"...if you've been following our press releases over the last couple of years, we have tried to stay focused on the server and the WAFS side of the business, and to eliminate all of the minor distractions and products that have come on board over the last ten years and really don't play much of a role in who we are now, and as we eliminate those things, we have eliminated a lot of those licensing fees. So as Bernard mentioned earlier, about the only thing we do now is we pay for a part of EFT Server that we licensed from someone. It's not a big fee; I don't expect it to increase; and I expect us to maintain upper 90's unless something fairly dramatic occurs and we decide to license someone else's product to enhance what we're doing; right now I don't see that happening, and I think for the foreseeable future, 95 to 99 is probably where we're going to be."

"Actually the 2nd question was concerning the technical roadmap for the product. Whether you're planning to sell it only in conjunction with your secure file transfer product or are you still planning to sell it on a standalone basis?

No, we DEFINITELY plan to sell it on a standalone basis. Some of the things that we have been working on here that have added to the time here is the integration and being able to sell it AS one product. But Availl and the WAFS product has a very, very definite audience out there for a standalone basis. (Okay.) We expect to be doing that and we expect to be adding it to the enhanced file transfer product. Right now, they work very well independently. There's not that much required to make that a one system sort of operation, if you will, Raymond. We DEFINITELY believe that the market for a standalone Availl product is there, not only on the WAFS but the other products that came with the Availl package, that, we think CDP and those kinds of things, we think DEFINITELY have a market. We do believe that integrating them into EFT ALSO presents us an even higher scale of opportunities."

Congratulations are in order to Globalscape, in my opinion, for completing the upgrading of the CDP product. It's true they took more time than they initially desired, but they faced facts, got it right and didn't send out a premature product. In my view, I'd say it took an extra quarter over what I expected because I gave them through June to have it ready; (and they're working on the additional three WAFS features at the same time, you understand,) but you always have a margin of error timewise to be on the safe side in your R&D. So I've been fine with it. What would have upset me would have been if they hadn't faced the realities and just threw the products out there to make investors happy, which would be totally uncharacteristic of them.

Since the CDP link is up and online today, (I'm not sure exactly when it was linked up), I'm fairly certain the sales team in NY last week was promoting their CDP as well as all the other software products. It will be good to see when the WAFS features mentioned are announced.



p.s.: Bollinger Bands are very tight 

cheers
Oliver

Thanks for that link and the post la-onda

As the CEO says, "GSB stock is dramatically undervalued".

There weren't any news out and the stock declined 3% yesterday, on low volume. I'll keep holding GSB for the long term.

Still nothing new on GSB, as the stock went down 2.6%. After all, I guess I was wrong about positive news pending. Just the normal (but hardly predictable) back and forth action.

I'll continue holding GSB for the long term.

GSB is undervalued but it looks like it needs some kind of catalyst to move it sharply higher before the end of the year. The catalyst could be another big order from a governmental institution or business coming from the partnership with Synteras. If none of these happens, strong growth at the core business will keep improving the business fundamentals:

"I am especially excited about the way our core business, Secure File Transfer and File Sharing continues to explode," commented Randy Poole, President and CEO. "At 60% growth, we would have had a great quarter without the Defense Department order. Since inception in '03, our server-side business has more than doubled each year from $600 thousand in '04 to $2.9 million in '05, to $6 million in '06, and we'll exceed $13 million this year," stated Poole. "Those core products are fueling our steady, if not dramatic, growth and making it possible for us to participate in the very large order arenas that are not as predictable. We'll take advantage of those opportunities as they occur while focusing on the day-to-day activities that have gotten us here," concluded Poole.

I'll keep holding GSB for the long term.

Just 6,300 shares traded on GSB, so nothing changed, I'll keep holding the stock.