Ace*Comm Courts Domestic, Foreign Business
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Ace*Comm Courts Domestic, Foreign Business By John Makulowich
The picture frames on the walls in the Ace*Comm Corp. lobby recall the company's past successes and the value it places on institutional memory. Alongside the faded local newspaper clipping from 1985 profiling the company are letters of commendation from some of the giants of corporate America.
The 200-person Gaithersburg company, which develops, markets and services operations support systems - the so-called back
office - for networks set up by telecommunications service providers, among others, is doing a lot of things right.
Not only is it riding the crest of a booming stock market for high-tech stocks since its IPO last August at $7 a share, but a respected investment firm, Amerindo Investment Advisors Inc., San Francisco, has been a consistent buyer and now owns nearly 15 percent of the 9 million shares outstanding. Ace*Comm stock closed July 31 at $19.25 per share on the Nasdaq Stock Market.
What is the company's current appeal? Aside from its deep penetration of foreign markets, where it gets about 70 percent of its revenues, the company produces both hardware and software that allow public and private sector administrators to collect data on network use and efficiency. That information can be used to improve billing, detect fraud and enhance market research.
Since mid-1994, the company has made most of its money from sales of its carrier network products. Its filings with the Securities and Exchange Commission reveal that it expects those sales to continue, providing a major percentage of its revenue for at least the next several years. The remainder of the firm's revenue comes from network management products sold to enterprise customers, including the military and federal agencies.
CEO George T. Jimenez admits that both the Telecommunications Act of 1996 and the global trend toward deregulation and privatization also are propelling his company forward.
Intersolv photo George T. Jimenez, CEO of Ace*Comm
"The Telecommunications Act spawned new markets, for example, CLECs (pronounced see-lecks, for competitive local exchange carriers) and alternative carriers, who can use our products. Also, the trend worldwide for private ownership of networks works in our favor. A report by a top consulting firm estimated that 450 carriers are likely to come on the scene in western Europe in the next 24 months," said Jimenez.
The company recently announced a deal with SpectraNet International, a San Diego, Calif.-based CLEC, to use its NetPlus Pro*Vision for automating its billing, customer care and operations support systems. On the global front, agreements were struck in the last few months with Guangzhou Ricsson Computing Co. of China and the KT CAMA project in Korea.
The future looks bright for Ace*Comm, given those deals and the variety of partnering agreements it forged with the likes of AT&T, GTE, Lucent, Microsoft and Newbridge Networks. Cream on the cake came with the recent strong buy recommendation by the investment banking firm, Alex. Brown, which just initiated coverage of the company.
In its report, Alex. Brown estimated the 1998 market for Ace*Comm's products and services at $1.5 billion. Two of its key products are N*Vision and NetPlus. The former, introduced in March 1997, allows real-time network data collection and analysis and can output reports through PCs in seconds. NetPlus, its major product for enterprise customers, automates network management in five areas: security, performance, accounting, fault and configuration.
With consolidation in the telecommunications industry proceeding apace and mergers and acquisitions occurring daily, is Jimenez looking over his shoulder?
"At any given time someone is knocking on the door. We're certainly not courting anyone right now, but a good marriage is not out of the question," Jimenez said.