TEO - Ready to go into Orbit!

HP,

"OK I admit to have not followed this company closely and I did miss the 0.9M fund-rasing which I agree is quite important."

No, I'm afraid you can't just laugh that error off. It was a massive error and lead you to the excessively negative analysis.

Yes, you can say TEO is not for the faint hearted and I understand why a financial adviser wouldn't recommend it for widows and orphans:

It is an AIM stock not a footsie stock like Marconi or Railtrack.

The historic numbers show losses.

It has a pesky historic oil holding that is taking time to sell.

BUT you need to understand what has happened since and, yes, the revenues have not yet been reflected in the accounts, so there is a greater risk than after revenues confirmed by the accounts. BUT then the price you buy at would be higher (possibly much higher) to reflect the lower risk/reward.

The art to getting above average returns and possible multi-baggers is to buy just before the turn when the actions have been taken but are not yet reflected in the accounts and in an environment where financial risk is reduced. This company has no debts, relatively low cash burn and has recently raised more cash and is now getting significant revenue. It has never had trouble raising cash in the past.

And they actually didn't say they would need cash. If you read it carefully it is hinting that existing cash and revenues are bigger than cash costs, but it is standard wording to allow the company flexibility to raise funds to expand infrastructure if things go well and they want to market to wider markets at an earlier stage than cashflow allows. TEO have been very good at optimising useage of cash and minimising costs and living within their means. Maybe now, with things looking good with C3 and Qstik, they feel confident to hint at more aggressive marketing of markets they were constrained to go for in the past. We know this has been the case. The directors have said it.

But even then they say any possibility of cash requirement would be limited.

Not for widows and orphans, you say. Fine, have that opinion, but do not patronise us who have followed this company for a lot longer and know what has happened in detail and can take a view on what will come through the next set of accounts and particularly in 2006 when C3 is in full flow, Qstik has got going and RDP3 has got going, leaving aside any other contracts the company might win.

New revenues are much higher than in the past - C3 is at least £900k pa. Revenue growth could be dramatic at very high margins (C3, RDP3 and Qstik) and costs can be controlled very easily - It's head office/plc overheads, engineers, development costs (for specific projects and some paid by the customer and some subcontracted as required so costs are not carried), DOM just ticks along not requiring funding by TEO.

Profit growth could be great.

And there is enough known and announced for those who are prepared to read and look forward and work out why some say the risk/reward profile is very good indeed.

;-)