911: Seybold Rings up Intrado

09/05/2002 12:00 am EST


Andrew Seybold

Editor-in-Chief, Forbes/Andrew Seybold's Wireless Outlook

While some newsletters are general in nature, others are highly specific. Such is the case with Forbes/Andrew Seybold’s Wireless Outlook, a sophisticated service that focuses exclusively on the mobile computing and communications industries. The service warns, “although wireless stocks can offer great technological promise, they are also volatile. Investors should access their risk tolerance before buying.”  Here's the service’s latest Stock Spotlight.

“Soon, your cell phone will track where you are. The FCC has mandated that all wireless service operators provide 911 location-based services by 2005. Initially, the idea is for you to be quickly found in the case of an emergency. But eventually, the technology can be used for such applications as sending coupons to your cell phone as you pass a store, or informing you of congestion in nearby traffic. The company that stands to be a big beneficiary of all this is Intrado (TRDO OTC), the largest 911 service bureau with more than 204 million wireline subscriber records and 14 million activated wireless subscribers.

When a caller dials 911, the call queries Intrado’s data servers which associate the caller’s telephone number with the caller’s location and passes the information along to the closest Public Safety Access Point, which then dispatches police, fire, and other emergency services. While there are a few competitors, Intrado has the biggest market share providing its services to operators such as Verizon Wireless, Sprint PCS, and Cingular. Today, much of Intrado’s revenue comes from managing caller databases for operators. But Intrado also makes money by licensing its 911 software to operators that prefer to manage their own 911 data records. 

Like just about all wireless stocks, TRDO has been hit hard. The stock is down more than 60% for the year to $13, partly on concerns that turmoil in the long-distance industry will hamper sales of its services. Recently profitable, TRDO should have a 2002 p/e of 25. Its price-to-sales ratio is two and its five-year sales growth rate is 39.5%. And the company has a book value of $2.89 a share. If you can stand some risk, TRDO should prove to be a good investment, especially once market sentiment improves.  Intrado has much going for it: reliable growth, rising margins, a unique market with few competitors, strong management, and now, a reasonable stock price.”

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