Mitel is a premier provider of IP telephony infrastructure, principally to small and mid-size organizations characterized by 1,000 or fewer lines. Products include IP-PBX systems, desktop hardware, UCC applications and managed services. Based in Ottawa, Canada, Mitel employs ~2,400 individuals and has 1,600 channel partners across 90 countries.
All amounts in US$ unless otherwise noted.
Semiconductor Devices and Related Technologies
UPSIDE LIKELY ON EXPANDING SOFTWARE SALES
We reiterate our BUY rating and increase our price target to $6 from $5 following largely in line Jul Q results and healthy gross margin guidance.
While the outlook for Oct Q revenue is a little light versus our previous model, gross margin expansion is proceeding at a strong clip, and we expect MITL to further capitalize on traction for its MiCloud UC-as-aservice offering and recently-acquired prairieFyre’s contact center solution. We continue to view MITL as well positioned in leading virtualized UC applications and see upside potential to our estimates on continued gross margin expansion driven by expanding software sales.
MITL reported Q2/C13 (Jul) results. Revenue was $141.6 million compared to our estimate of $142.5 million and consensus of $143.5 million. EPS was $0.17, compared to our inline estimate of $0.15.
Management guided Q3/C13 (Oct) to revenue of $142-148M, and implied EPS at the mid-point of $0.19. This compared to consensus estimates of $149M/$0.21 and our estimate of $148M/$0.21.
Management highlighted that the guidance includes caution based on the softness seen by Avaya and Cisco.
Mitel completed the acquisition of prairieFyre, a contact center software provider, for $20 million in cash in the quarter.
prairieFyre provides Mitel’s existing contact center solutions and management highlighted the acquisition was accretive in the quarter.
MITL’s price target of $6 (was $5) is 6x our C2014 EPS estimate of $.95
- Mitel Reports First Quarter Fiscal 2014 Financial Results (virtual-strategy.com)
- Mitel 5224 – Voicemail and # of rings. (community.spiceworks.com)