Radvision: Cramer's Right - This Stock's Headed Up

Radvision (Nasdaq: RVSN) CFO Tsipi Kagan was recently interviewed by telephone on the “Mad Money” program, by host James Cramer, who as usual, was very brief and matter of fact. As far as I can recall, Cramer has spoken favorably of Radvision in the past, and what he in effect said this time round was that if conference calls are clearer today than they were before, then Radvision will undoubtedly be assured of success; and with partners like Cisco Systems Inc. (Nasdaq: CSCO), a bonanza is now even more likely. I quite definitely agree with him on this.

Tsipi Kagan, whom I have known since she was senior manager at Ernst & Young Israel, knows how to play the game. Bear in mind that you get no more than 15 seconds to have your say on Cramer’s show, and Kagan did very well. There can be no doubting that Cramer is very important to any company listed on Wall Street, for better or worse. I say for worse too, because it’s sometimes difficult to fathom out exactly what makes this capable individual tick. Did he, for example, compare Radvision with its competitors? The reputed investment house Cantor Fitzgerald & Co (which lost most of its staff in the September 11 attacks), issued a “Hold” rating for Radvision at the end of October, and Cramer, with his typical gentility, brushed aside Cantor’s reservations.

Of course, having Cisco as its largest customer has many more advantages than disadvantages for Radvision, dependence notwithstanding. I too believe that it is one of the more interesting companies, with a tremendous potential, but what we need to ask here is whether it would be responsible to rate it “Buy” at current prices. Six analysts have rated Radvision “Buy” and two have rated it “Hold.” The analysts’ consensus earnings per share estimate for 2006 is $0.84 and $1 in 2007, which sets the multiples for these years at 24 and 20, not expensive but certainly not cheap.

Last month, global consulting company Frost & Sullivan awarded Radvision its 2006 competitive strategy leadership award for its distinctive market strategies in the Asia Pacific videoconferencing infrastructure systems market. While Cisco is, without doubt, a major customer, Sony Corporation, Aethra SpA (a global video conferencing solutions company headquartered in Italy), and several other giants are as well. Frost & Sullivan industry analyst Yen Yen Har explained that “Radvision’s active participation in industry consortia and continuous review standards developed by international bodies have further reinforced its position as a technology forerunner in the Asia Pacific videoconferencing infrastructure systems market.”

Radvision was co-founded in 1992 by the Rad Group and Eli Doron. For the layman, it could be described as a company that produces infrastructure for video, image and data networking solutions. Its current CEO is Boaz Raviv, a business development professional (usually the right kind of person for this role), and its chairman is Zohar Zisapel.

Having studied its behavior, a trait which reflects the company’s business practices, I have no doubt that this is a stock which is heading upward, as the company simultaneously increases its market share on the one hand, and streamlines its existing market share on the other. I am confident that Cramer will be proved right in the long-term but for now I wouldn’t be in a rush to go anywhere.

Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.