“the Cisco Systems of the 21st Century”

by Travis Johnson, Stock Gumshoe | March 26, 2007 4:40 pm

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[1] and Brian Hicks[2], 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[3], 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.

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


Endnotes:
  1. Quantum Confidential: https://www.stockgumshoe.com/tag/quantum-confidential/
  2. Brian Hicks: https://www.stockgumshoe.com/tag/brian-hicks/
  3. water: https://www.stockgumshoe.com/tag/water/

Source URL: https://www.stockgumshoe.com/2007/03/cisco-systems-of-21st-century/


8 responses to ““the Cisco Systems of the 21st Century””

  1. Anonymous says:

    I figured out it was DIvx too. Can’t figure out how they will make money if you can download Divx for free….?

  2. coldfusioneer says:

    No way it’s Divx. The correct answer is Raptor Networks [RPTN]. CISCO builds switches. So does Raptor Networks, but much better and cheaper. It’s moving now, so hurry. US Army contract is just around the corner.

  3. Stock says:

    It may well be that the correct answer to “who’s the next Cisco” is Raptor, I have no idea — but Raptor is definitely not the company being pushed in this email. I have seen them pushed by other newsletter spam, though, on this army stuff — interesting business, thanks for the comments.

    And as for DivX making money off stuff you download for free … I’m not sure, they may get licensing fees from creators (like Adobe does) or they may be pinning their hopes on their social network plans. I’m not interested, but I could be wrong.

  4. tiramisu says:

    Of course, it is Raptor Networks as pointed out by coldfusioneer. And Tobin Smith of ChangeWave owns shares of it.

  5. Anonymous says:

    Sorry but your all wrong!
    It’s (ONT) remember the tease starts with a company at 50 cents and by the 2nd e-mail clamied has doubled and by the 3rd e-mail has tripled. look at ONT at $1.97 today 4-12-07 and still has more up side to come. also (KEY)it is a software company, not a switch builder.

  6. One Guy says:

    I think you’re all reading a few different emails or thinking about different ads — for this one from Quantum it’s definitely DIVX, but there are other “next Cisco” teaser ads out there. Neither RPTN nor ONT is anywhere near the market cap teased in this email (over 700 Million), and neither one is headquartered in San Diego. To say nothing about the specific quotes about the share price (at one point $23, Raptor and On2 aren’t close) and the quote from the CEO (which I’ve checked on the San Diego Union-Tribune, and it’s absolutely DivX).

    On2 and Raptor may well be the answer to other teased ads — I think there’s one from Tobin Smith floating around that does match Raptor at a quick glance — but not this one (which is from Brian Hicks).

    And of course, I have no idea whether any of these three will be anything like the “next Cisco” — I can’t tell you if the newsletters are right, just the stocks they’re teasing. If you have the ads that you think tease Raptor or On2, send them along and we’ll look into it.

    Best,
    SG

  7. tiramisu says:

    This the teaser I’m referring to when I’m saying the company is Raptor Networks.
    Best regards and keep up the excellent work !!

    ======= Teaser ON ===========

    The “next Cisco”

    I love rooting for the underdog.

    Be it football, basketball or a game of tiddlywinks, I love to see the up-and-comer take it to the champ.

    When it comes to investing, I love an underdog, too – but for a very different reason. When you invest in an underdog – after you’ve done all your homework, of course – you get the opportunity to reap some truly mammoth profits.

    The company I’m writing about today is indeed an underdog.
    But an underdog only in size, not talent.

    You see, this company has engineered, and patented, a disruptive new technology that could ultimately take a big bite out of one of Cisco’s core businesses.

    If everything works out according to plan – this is a microcap, nothing’s guaranteed – this firm could be a takeover target, as a 5-bagger from here. And if management manages to fend off suitors, we could well see a ten-bagger, to start, in 2-3 years.

    Click here to get in on the ground floor.

    I gotta tell you, the more research we did into this company, the more I found to like:

    * First off, the company has a low current market value – it’s flying under Wall Street’s radar. At around 75 cents per share, you can take a meaningful position without risking a lot of cash.

    * The company has a low burn rate and low debt. In other words, it’s spending its cash slowly and wisely. This lessens our risk of one of the dangers of investing in microcaps – a company issuing a ridiculous number of shares to raise cash.

    * The management team is top-notch. They’ve purposely started slow to avoid a big money drain and have focused on a handful of important, early-adopter clients to help build momentum.

    All in all, things are going extremely well for the company right now. All they need is more recognition in the marketplace – that’s the catalyst that’ll break the game wide open.

    You can wait until that time and buy it later for much smaller gains.

    Or you can take a little risk capital now and go for a tape-measure home run.

    I’ll explain this breakthrough technology below. Anytime you want the name and full details, simply click on one of these links to get a no-risk subscription to ChangeWave MicroCap Investor at a special low price.

    This company has perfected and commercialized a new “switch technology” that blows away the competition, including Cisco Systems.

    There’s no need to get technical here, so let’s use the most basic explanation. “Switches” allow different computing devices on a network – whether inside a company or over the Internet – to connect quickly and smoothly.

    Without these switches, the networked world as we know it doesn’t even exist.

    Cisco is the 800-pound gorilla in the networking world – the bully on the geek playground.

    Cisco – along with competitors like Foundry, Force 10, Extreme and others – use their weight to push outdated, overpriced equipment on its customers.

    Sure, they update the veneer on occasion, adding bells and whistles in an attempt to cover over flaws. But their switches are still based on 10-year-old architecture that’s ill-equipped for the realities of today’s world.

    And that’s where our company steps in.

    While entrenched market leaders were reluctant to cannibalize existing rich revenue streams, this firm’s engineers have perfected the next-generation switch technology. If you want more detailed science, you’ll get it when you join me at MicroCap Investor. But as an investor, here’s all you need to know:

    This breakthrough technology is to the networking world what personal computers were to the world of mainframes. Completely disruptive. The rules all change.

    There’s no turning back. This new technology will become dominant. The only question when you’re talking about a microcap company is this: Will these guys hang tough long enough to reap the huge rewards?

    All my analysis says the odds are good they will.

    That could mean a buyout by a larger rival and a 5-bagger for us. Or it could mean a ten-bagger, to start, in 2-3 years.

    And all it takes is a little risk capital to play for a shot at earning a small fortune.

    Click here to accept your no-risk trial subscription to ChangeWave MicroCap Investor now.

    We’re already up about 75% in less than two months on this stock. I’m expecting a small pullback shortly, as some traders take fast profits – nothing ever goes up in a straight line.

    That’ll be your chance to load up – and it may be your last chance before this thing goes ballistic.

    That’s because the industry is really warming up to this company’s huge competitive advantage: Blazing speed! This new switch technology delivers up to 100-times the speed at less than half the price of older technologies.

    How? By using a series of small high-performance switches connected by fiber-optic links. They behave like a single, direct switch – even though they’re separated by distances up to 25 miles!

    Here’s an analogy from the airlines industry:

    This new technology lets packets of information “fly direct.” But all the competitors are still stuck in the hub-and-spoke model – a lot of stops and a lot of waiting around.

    So do we really need all that speed?

    Well, I’ve heard through the grapevine that major streaming-video distributors like Google are quietly sneaking into this company’s 10-gigabit Ethernet switches to address the key issue in streaming video – “latency.”

    Latency is just a fancy word for delayed packet delivery.
    In other words, the jerkiness you often see in many videos streaming to your computer over the Internet.

    The great thing about this new technology is that it costs just half of competing products, while outperforming alternative systems. That’s why Nortel, CACI and other value-added resellers are including these switches in their own systems. No other supplier can compete with the price/performance value proposition.

    As streaming video becomes more prevalent (think of just how many times Michael Richards’ recent tirade was streamed to computers – millions of times!) the need becomes clear.

    And if it’s good enough for Google, it’s good enough for me. Click here to join me.

    Right now, the potential market for this company’s products exceeds $10 billion per years – and it’s growing at double- digit rates – expected to reach $14 billion by 2010.

    So there are plenty of profits to go around.

    And it’s not all about movies on YouTube. All this growth is being fueled by the convergence of voice, data, video, storage, disaster recovery, clustered computing, 3G mobile services and more.

    In fact, this company is also working with our government to fix bottlenecks in key networks. So national security is a profit contributor as well.

    So is this a sure thing? Of course not.

    What we’ve got is a tiny company with revolutionary switching technology that is far superior in price and performance to anything Cisco has to offer.

    If that was all that mattered, they would kill off Cisco’s switch business and quickly become the market leader. But the real world isn’t quite that simple.

    It’s going to take time. One satisfied customer leads to another. Word spreads. Orders follow. And in the not- too-distant future – if things go at least partly our way – we’re sitting on a big pile of profits.

    So if you’ve got a little risk capital – and love the thrill of the hunt – get the name and full story online now. Simply click here to try MicroCap Investor on a no- risk basis at a special low price.

    ========== Teaser OFF ============

  8. One Guy says:

    Thanks — Yep, this is the Tobin Smith one I haven’t gotten around to reviewing in detail yet, but my sense is that you’re right about it being Raptor Networks. Thanks for saving me the effort on this one … maybe I should open up a forum or something on this site so it’s easier to share.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.