“This ‘Cloud’ Has A Golden Lining (and a 9% dividend)” (Roger Conrad)

Sniffing out a teaser from Conrad's Australian Edge

By Travis Johnson, Stock Gumshoe, January 19, 2012

We looked at a few teaser picks from the Australian Edge service back when it launched last Fall, but this appears to be the first big push for new subscribers since then (don’t know the track record so far, but they say they’re “on track” for 106% gains this year).

I’ve gotten this teaser ad about a “cloud” company from many readers on both sides of the globe over the last few days …

… so let’s see if we can sniff out some answers for the finest readers in cyberspace.

To whet your appetite:

“An Australian communications company has just launched a ground-breaking new “cloud” service. Businesses, small to large, are now beginning to outsource all of their computing to this innovative service.

“This company is the latest stock pick in our award-winning portfolio, and they’re uniquely positioned to dominate Australia, the Pacific and the enormous markets of Asia.

“Savvy Australian investors–the few with enough knowledge to pay attention–are buying now, because life-changing gains are just around the corner.”

There’s a bit of rundown on just what “cloud computing” is — but you probably know all that already. Simply put, it’s putting all the data on servers so it can be accessed from anywhere, and relying less on the computing power or data in your office, or your cash register, or your iPad, or whatever.

And this “cloud computing” pick is an Australian firm, of course — here’s a bit more detail from the ad:

“An Australian communications company pays 9% every year. And they’ve maintained this rate for roughly a decade…

“So good or bad, through the best times and the worst, you can count on your payment. (It’s true: The land of the boomerang knows the value of a good return.)

“This stock is as predictable as a Disney movie. And now that you’ve heard the ‘happily ever after,’ let’s get to the gains-earning urgency that’s happening right now”

So what is the “cloud” that’s on offer here?

“They first began offering limited cloud services in 2009, and have slowly expanded since then. In July of 2011 they announced an AUD 800 million comprehensive upgrade. The new and improved cloud has just recently become fully operational….

“Large clients arrange contracts directly with this company, since they require custom service that can handle hundreds of employees.

“Smaller clients order services directly from the Australian Cloud website, and are able to set up either basic or pay-as-you-go plans that handle everything from customer databases to videoconferencing.”

And we’re told that this “cloud” service offering from this company is “sticky” — which makes the cash flow more predictable:

“Companies that choose the savings of the cloud are ‘locked in.’ Customer turnover rates are very low, as customers pay their subscriptions year after year after year.

“That’s why this is so safe.

“All of the frustration and risk of investing in a tech company goes away.”

What else makes this Australian cloud pick stand out? In Conrad’s words:

“It was the first Australian-based cloud service to receive SAP certification, making it the only Australian platform that can run Enterprise.

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“But there’s one VERY BIG REASON that our stock pick has the most UNIQUE cloud in the world: As a communications company, they own the network that powers their cloud.

“This is an extremely important advantage.

“Because cloud services require an incredible amount of bandwidth to operate, clients of other services must first find a network provider that can offer bandwidth that’s robust, secure and reliable enough to handle cloud computing.

“But our pick makes it easy for their clients–because they already run one of the largest and most impressive broadband networks in the world.”

And apparently there was a big deal this year to expand broadband access:

“In October this company inked a deal with the Australian government to contribute their network to the National Broadband Network (NBN) for the price of AUD 11 billion. The goal of the NBN is to offer government-subsidized broadband access to every Australian, something that our stock pick isn’t able to do as a private company.

“This NBN deal is still awaiting approval from a regulatory board, and if it goes through, the ownership of the network will transfer to the NBN.

“But the home-court advantage doesn’t go away. The network will still run on the platform that was custom-built to run the Australian Cloud….

“… they get to pass off the maintenance costs, get paid AUD11 billion, and continue usage and maintenance of a network they built.”

And, we’re told, timing is key because…

“This giant infusion of cash from the sale will have an immediate effect on the share price.”

I don’t know about you, but I confess to having a certain fondness for “giant infusions of cash.” It just warms the belly somehow.

So who is this pick? A few more clues first, if you please:

They’re not just a “cloud” company — they’re a big telecom firm with a strong mobile business:

“They added 1.6 million new subscribers to their mobile service in the past year alone. They’ve greatly expanded the features of their mobile service, and that expansion is already earning them increased mobile revenues of AUD 8.1 billion.”

They’re offering mobile service in Hong Kong,