My Take on Stocks

Peter : On Rad's Radar?
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

My Take on Stocks

So "BroadSoft Inc.(BSFT) shares climbed 43% after the voice-enabling software company reported third-quarter earnings that exceeded estimates," according to MarketWatch. Total revenue increased 22% year-to-year to $22.3 million; up 13% from the second quarter of 2010. License revenue increased 27% year-to-year to $12.9 million; up 22% growth from Q2 2010.

The Buzz around Hosted UC is certainly up, driven by such companies as Polycom and its PR machine. Yet lately there are a bunch of articles about businesses switching back from Hosted to premise based PBX, but most of those are quality issues. Now that many of Broadsoft's customers are preparing to actually go-to-market with Hosted PBX (or some version of Hosted UC) as opposed to just selling SIP Trunking, revenues may be up for the next couple of quarters.

Limelight and Level3 rose over 17% each on news that Netflix is changing its CDN provider, moving away from Akamai over to Limelight and Level3.

Meanwhile PAETEC is flat. In its earning call, CEO Arunas stated, "Adding products like data center and cloud services, equipment solutions, energy offerings, IP security and managed services to the more traditional voice and data services offered to these small business customers while leveraging our national fiber footprint we believe will enable us to minimize both the customer churn and the price compression typically experienced in this customer base and continue our ability to fight unfair with the competition. We expect that this small business division will become another sales channel for our company." Let's throw the kitchen sink at them. As I explain to my friends at XO, when you have a catalog of services so wide and diverse, no one can learn about them all. Not your sales teams, not your channel managers and certainly not your agents. It's like going to Cheesecake Factory. If you have ever worked in the restaurant industry, you know that the bigger the menu, the more mediocre the food; the more the food comes in frozen, some of it sitting in the freezer for a while.

I understand the one-bill marketing strategy, but PAETEC's radio ads on Bucs NFL football never mention voice or network; it's about technology and leasing for equipment or software. So they want to be a technology company? How does PAETEC's energy resell solutions fit into that model? Plus first it buys Allworx, then Quagga. What about Hosted PBX? Will they utilize the Broadsoft for more than SIP Trunking? Is PAETEC just throwing stuff against the wall to see what sticks? Or is it a buy growth in any sector to keep the stock price afloat? I know, I'm being harsh. Even the transcript says that core services revenue is dipping only to be offset by revenue from acquisitions like Quagga and US Synergy.

Paetec grew its direct sales force to 451 in 3Q2010. There were net new additions totaling about 140,000 equivalent access lines. The indirect cahnnel amounts to about 35% of that, so that's about 67 EAL's per sales person per month. Eh.

Paetec keeps talking fiber, so I would like to see how many fiber deals they are closing. The CavTel acquiistion is about revenue certainly, but the fiber network. We'll see how they levergae that. It's difficult to sell fiber and Lit Buildings, because it is a directed sales plan, which goes against the grain in telecom.

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