“the Cisco Systems of the 21st Century”

By Travis Johnson, Stock Gumshoe, March 26, 2007

A few readers sent this one in, and one of you had even figured out the company — great work.

Here’s what we’ve got:

The tease ad is from Quantum Investor/Quantum Confidential and Brian Hicks, as have been some of the previous ones I’ve looked at. This time, Brian wants to send you a report called Dawn of the Digital Video Revolution — if you’ll just subscribe.

And in that report, he’ll tell you about a company that’s “recommended by YouTube and Google” and has been called “the glue that holds the entire digital media marketplace together.”

Here are a few of the details:

Came public about six months ago, in September.

Located in San Diego, and has a brash CEO who aims to build the biggest company in San Diego (surpassing Qualcomm). (He was quoted to that effect in the San Diego Union-Tribune back in November.)

Market cap of $750 million (a bit less now, the company’s down about 20% on the year).

And he makes a bold prediction about the future of the company’s stock price:

“I’m talking about going from just over $23 to north of $303 per share in no time.” (made only slightly more difficult by the fact that the stock has dipped to about $20)

Put all that into the Stock Gumshoe cognification machine and we find out that this company is …

… drum roll please …

DivX (DIVX)

This is a digital video company, best known for the DivX digital video format that makes internet transmission standardized and easy. I’m no techie so I don’t know why DivX is any better than its competitors, but it is in very wide use and has been around for close to a decade, and they’re aiming to cash in on both the use of their technology and on the “community” of digital video uploaders and downloaders. T

hey just came public back on September 22, and they are profitable, so maybe there’s something there for folks who want to delve into it. There are plenty of competitors and related companies, including On2 Technologies with their Flash codec and the big guys like Microsoft and Apple, and I don’t really know where DivX stands in relation to them … or whether there’s any potential that they could be a buyout target, or a target for squashing, from any of the big guys.

I don’t know if the hyperbole about being the “next Cisco” will hold water, but I do know that you needn’t subscribe to an expensive newsletter, even for a “free” trial, just to find the name of the company they’re dangling in front of your eyes like a burro’s carrot. If you know more about why this company is or isn’t worth the money, feel free to comment here — I’m sure we’d all like to hear it.


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