SAN FRANCISCO — Computer
systems integrators — known as value-added resellers — must prove their
revenues will keep coming, and coming.
It’s a matter of what they call earnings or sales
visibility. Quarter after quarter of sales growth using the integrator’s savvy,
its sales force, its consulting mojo.
In the case of the one that is getting good buzz in
Silicon Valley here in northern California, Sysorex Global Holdings (NASDAQ:
SYRX) appears to be well on
the visibility track.
Hyperbole aside, what we have here is one of the
better quarterly conference calls I’ve come across.
Sysorex Global, based in Silicon Valley,
California, is one of those properties that might co-relate with technology
themes that influence all of us. The eco-system these days in first-world
economies include Big Data, Cyber Security, Mobile Computing, Enterprise Analytics,
Clouds and Government Techology Upgrades.
This Sysorex is attempting to replicate the merger
and strategy success of its predecessor by the same name 20 years ago.
The linked conference call for Sysorex has a lot:
sales breakouts, anecdotes about big customers, sales cycle information and a
nitty-gritty look at a company that might enjoy rapid sequential sales growth
in coming months and years. HERE is the playback of Sysorex
Global conference call: http://client.irwebkit.com/Sysorex/events.
Sysorex Global’s CEO in this
week’s call goes to the mat with details about government contracts, data
analytics and even forecasts of sales growth, margins and revenues. As our TCR audience
knows, we are staking the newly listed NASDAQ company, SYRX in USA, as a
possible beneficiary of government agencies, technology operators, health care
and even interactive gaming and consumer patterning.
I made a well-publicized gambit and investment
years ago in another industry: genomic tools. That turned out to be one of my
best ever. Sysorex Global is shaping up as owning the talent
and strategy to replicate that success.
Just as Sysorex’s units, among them Lilien
Systems here in Marin County, California, “up-sells” clients
with a suite of increasingly proprietary computer services, so must the company
and its executives convince investors this is no mere sum of the parts
is greater than the whole.
“We’re not doing a roll up here … but we
would certainly be open to future acquisitions,” CEO Nadir Ali says.
The company’s growing staff might insist no one
part of Sysorex is more important for success than any other. And there are a
lot of parts. See web presence.
?Those parts — such as Shoom and
AirPatrol — are given the creative freedom to maintain their respective
identities within the Sysorex holding company. When you look at the web
presence of Sysorex, for example,
you get a sense how BIG this company is in the handling of government services,
agencies, project management — to mention a few. But you have to go to the
other separate web presences — AirPatrolCorp.com for instance — to get a sense of the technology
reach of the growing services company.
Precise location technology and data storage are
themes for AirPatrol, which has about 15 patents.
Location is almost everything, the disparate
Sysorex companies believe.
Still, for my money, and the money of our TCR family, it is the unit I have known for 18 years,
via a friendship with the principals, Lilien Systems, that is one key to
powering greater sales.
Lilien Systems uses its
sales-targeted computer consultants to cover the map for clients, such as
Caesars Interactive Entertainment of Quebec, Canada. “It up-sells
data-analytic services,” among other features, Mr. Ali says.
The key word Mr. Ali uses is “tailoring”
services in its reach for mid-sized and large corporate and government
contracts.
“Better than expected gross margin at
Lilien” is, I believe, responsible for company guidance that sees
continued smooth and rapid growth toward net income.
Thus far, I like the improved profit margins — 33
percent. Sales were $17 million for the quarter. Shoom and AirPatrol contributed
to the revenue pie in the quarter.
Please go through the numbers — just by listening
to that call. Especially the questions at the close of the call.
It is a wonder that Mr. Ali reveals so much about
the strategy that could see Sysorex becoming one of North America’s leading
systems integrators. Sysorex Global Holdings Quarter Ended June 30, 2014?
Sysorex’s chief and son-in-law of the original
Sysorex founder in the 1970s to 1990s success story, Mr. Ali, does
a thorough job of describing the strategy of acquisitions for Big Data,
government services, cloud computing and (AirPatrol) mobile security and
wireless computing for ID and other purposes.
That dad-in-law, Salam
Qureishi, is still involved, as
chairman of the new Sysorex. The previous incarnation was a D.C. affair called
Sysorex Information Systems, and it sold to Vanstar Corp. in 1997 in a
transaction that was profitable for all.
The current SYRX $4 shares on NASDAQ are an
investment in a thesis we have pinned at The
Calandra Report for almost a year now: a
growing sales multiple based on the acceleration of sequential quarterly
numbers and perhaps even higher profit margins. Even a single-unit gain in that
sales-to-stock-price multiple will result in another $80 million of market cap
for the currently $80 million company.
We will look at this Sysorex strategy in six months
and likely see a company easily running an $80 million to $90 million real-time
yearly sales pace — and far more on a forward sales basis.
In future, I am hopeful Mr. Ali and his team will
turn to video for more of its educational and financial calls to shareholders
and the public.
I own Sysorex and have been purchasing more as I
can every month.
Speaking of video: This
next one is pretty encapsulated. In fewer than 2 minutes, you get a sense what Kaizen
Discovery (TSXV: KZD), a
relatively newcomer to the public markets, is pursuing in its mineral
exploration and financing efforts.
Kaizen’s CEO, Matthew Hornor, explains
how the small Canadian company is building its plan to locate precious and
specialty metals around the Pacific Rim for sale to Japan and other
manufacturers. Please find the video here: http://youtu.be/bhLGNyE8gfk.
September 25 and 26: At
the Cambridge House Canadian Investor Conference, Sheraton Toronto Centre
Hotel. Kaizen’s Mr. Hornor and others will participate in a discussion of the
volcanic “Ring of Fire & Its Emerging
Investment Opportunities.” Thom Calandra is moderator. Sept. 25 at 1
p.m. Toronto time.
THE CALANDRA
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