I see both MTON and OSTE as turnaround plays.
As of Dec 1, MTON has ended contracts with ATT. Meanwhile they have ridden its majority holder TeleraSonera who already sold most of its common stock last month, and is about to sell its restricted 3m stocks. All in all during past two years MTON lost 2/3rds of its revenue.
In my opinion the company is still very interesting from few perpectives. It has no long term debt, with 50M shares outstanding its current revenue levels falling to about $25M plus about 55M in cash, with sizeable assets it is worth about 2 - 2.50 per share right now, so it is currently trading at its book value. Almost no risk play at the moment, with rising risks as the time goes by without client/market market wins.
Any significant client win will boost the stock.
Downside is is if the marketing of their Infone service does not pick up. Marketing costs are significant and they'll most likely have to cut on their work force in short term.
One thing to mention here is that EDA (enhance directory service) service with ATT cost per call is 1.25 and MTON is selling Infone for $.89/call. Their service is supperb with almost no competition, which is my personal experience from using their service as ATT wirless customer.
All in all, I think that MTON is a risky stock, with nice upside potential if they either win new contracts or are successfull in selling Infone.
OSTE, is also a turnaround play as you noted. Seasonally it has a very nice 1Q history of advancements. The stock is on rebound from it's recent lows. Even though OSTE is not considered to be a major player, here is an interesting analysis by First Albany Growth.
"We are reiterating our Strong Buy rating on Osteotech; the company held a well-attended, upbeat presentation at the First Albany Capital Growth Conference. Management reiterated its growth strategy of driving revenues through a combination of building new product lines and increasing its sales presence in the allograft market. Our recent channel checks (see our previous note "A Solid Base Is Building" dated 12/02/03), as well as an attractive valuation at approximately 1.4x EV/TTM revenues, make OSTE a compelling investment, in our opinion. Our $14.50 price target is based on an average of 3.0x EV/ FTM revenues of $104.5M, and 25x FTM EPS of $0.46.
Management stated its focus on building new product lines and expanding its presence in the allograft market to drive renues. Specifically, the company is seeking to move into several new areas of orthopedics outside of its core market of spine. During the last year, the company signed a distribution
agreement with Johnson & Johnson (JNJ-$50.00-Not Rated) to manufacture a private label DBM, Optium, for use in non-spinal orthopedic applications.
Management stated it is seeking additional partnerships and will likely announce another private-label agreement before the end of the 1Q04. Also, the company is working on expanding its presence internationally, hoping to take advantage of the nascent international market, which it estimates is approximately 10 years behind the current U.S. market. Osteotech has signed several agreements with tissue banks in Europe, and expects to open a European tissue processing plant in mid-2005, with a goal of reaching an international revenue base of 15% of revenues in two years. In addition, management
highlighted its new Plexus technology in development, which is designed to increase yield rates significantly (by 1500%) from tissue donors and enables easier production of weight-bearing allograft products. However, the commercial introduction of this technology is likely to be two years off at least, depending on the regulatory pathway the company will need to take.
The company has expanded its sales force to help drive top-line growth. The company now has 34 agencies employing 171 sales representatives, in addition to its own direct sales force of 33 reps. The company's private-label agreements should also allow Osteotech to leverage its partners' sales forces to boost penetration into non-spinal areas, such as total joint and trauma. In addition, new commission structures put into place two quarters ago should begin to bear fruit in the upcoming quarters.
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LOUDeye is my favorite. I have been following for last 3-4 years, and one thing about this company is that it was able to navigate thru stormy weather during this period by tweaking and adjusting its business model. That makes me think that they have solid vision and persistent management that believes in the company. Other, significant and recent events in that space just happen to make them more and more compelling company. It has a technology and infrastructure in place that is ready to deliver the "licenced content" on a massive scale. Their licence rights are of huge value, which in the space they are in is a huge barrier for competition.
Another potential exit for this company is a buyout, which after recent announcement with Microsoft may be an option. They have maintained close ties with MSFT all along, as their top managers are ex MSFTies.
MEDI, i think that stock just simply hit its lows recently, with healthy pipeline and potentials for FluMist much higher then acknowledged and anticipated, especially during this flu season.
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