Eon Communications Corp. (EONC)

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Inventergy Global Poised for Growth After Merger

Christine Andrews | More Articles
February 13, 2014












One of the hottest and most popular industries over the past couple of years has been intellectual property. While the volatility can be substantial, there is no denying the potential that IP companies possess. While there are many IP companies that one can invest in, Inventergy Inc. appears to be one of the best option after several promising news announcements over the past couple of months.

Inventergy is an intellectual property acquisition and licensing company dedicated to identifying, acquiring, and licensing for fair value the patented technologies of market-significant technology leaders. The company is led by Joe Beyers, who has developed a reputation as being of the most knowledgeable people in the IP industry. Prior to running Inventergy, Beyers was the head of IP and global strategy at Hewlett-Packard (NYSE:HPQ).


In December, Inventergy announced that it would merge into a wholly owned subsidiary of eOn Communications Corp. (NASDAQ:EONC). After completion of the merger, the company will be renamed Inventergy Global Inc., with Inventergy stockholders having control of the company. This is merger has substantial advantages for everyone, and it appears that the market has taken kindly to the news.

Since the merger announcement on December 18, shares of eOn Communications have soared by more than 310 percent, as shown in the chart below.

EONC



With a small float of just 2.89 million shares, the company is currently valued at approximately $15 million. Prior to the merger, eOn Communications was valued at just $3.5 million. That speaks to the premium that investors place on the value of intellectual property, which is what Inventergy brings to the table.

Prior to the merger, eOn Communications was focused on providing innovative solutions for business communications. The company’s products were built on reliable open architecture that enabled easy adoption of emerging technologies, such as VOIP and concepts like Service Oriented Architecture. After the merger is completed, eOn Communications will retain a legacy business that should generate between $2 million and $4 million per year.

While that might not excite a lot of investors, the patents that Inventergy brings to the table should. At the time of the merger, the company held more than 160 patents from a Global Fortune 500 and Gartner-recognized technology leader in the telecommunications industry. Since that time, there has been a significant development, which has more than quadrupled the company’s patent portfolio.

On January 6, Inventergy announced it had acquired roughly 500 patent assets from Panasonic Corp. (PCRFY.PK) The assets include vital technologies in 3G and 4G communications, which happens to be an area that Panasonic has excelled at for many years. Following the acquisition, Inventergy now holds more than 660 patents covering the following areas:
Telecommunications operators
Base station equipment vendors
End-user equipment vendors

Because of the increasing need for speed that consumers demand from their mobile devices, the importance of 3G and 4G communications is becoming increasingly important to both retail consumers and businesses. In a preliminary analysis, Inventergy has identified approximately 100 companies that might benefit from a licensing agreement to the technologies now covered by the company’s patent portfolio.

Investors wondering if the stock has run too far may want to consider the fact that Inventergy appears to still be significantly undervalued compared to its peers based on several popular valuation metrics.

EONC Valuation Table

As investors can see, Inventergy is still vastly undervalued compared to three of its peers in the intellectual property space. In fact, another competitor, VirnetX Holding Corp. (NYSEMKT:VHC), is valued at a market cap of nearly $840 million despite the fact that the company is still running in the red. Once investors catch wind of the potential that Inventergy has, the company’s valuation should also catch up to the potential.

Christine is an analyst and fund manager with almost 20 years of investment experience. She covers a variety of industries, with a special focus on technology, and likes to write about value stocks, poorly understood or under-followed situations, and contrarian perspectives.

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