The Field of Internet Cloud Dreams24.09.2015

“Build it and they will come” worked for Kevin Costner’s character Ray Kinsella in the 1989 American fantasy drama Field of Dreams, which I confess I’ve never seen.

The novice corn farmer from Iowa abandons his food producing activities and builds a baseball field, which people flock to just as he’s in financial and spiritual ruin, apparently. The strategy seems to work for ASX listed companies whose business model involves internet cloud managed services, and believe you me, this is no fantasy.

ASX Listed Companies: Cloud Managed Services

First there’s Next DC, one of the first Australian companies into the Field of Data Centres. The company listed in 2010, after it had raised $40 million at $1 a share. Its stock climbed to $2.80 in July 2012 and now trade at $2.34 after a bumpy ride.

The company was founded and run by former Pipe Networks chief Bevan Slattery and was an early mover in data storage and management, building centres full of servers in the major metropolitan centres. Slattery is no longer a director of the company but he will be happy with its recent return to favour in the past 12 months, which reflects growth in storage capacity and in tenancy levels.

Under the Radar Stock and Small Cap: Macquarie Telecom
Then there has been the much-anticipated return to form of Macquarie Telecom. Trading at $7.65 this stock has returned our subscribers a tidy 53% since we tipped it in November last year when it was $5.

The company has been in the telco space since the 1990s as a reseller, then in the aftermath of the tech-wreck in 2000 it moved into data centres, or hosting. These days it owns and operates data centres in which corporates and government agencies store their servers. It also provides cloud services, outsourcing companies' IT needs.

In the last reporting period showed that MacTel has recovered its standing in the investment community by finally delivering on its long term strategy in hosting, and stemming revenue declines in its telecom business. Onwards and upwards it seems for its founders, Aidan and David Tudehope, who own just under 60 per cent. No doubt they are big baseball fans.

New Under the Radar Report Small Cap Stock: Bulletproof
And then there is a new kid on the block, the opportunistically named Bulletproof, which was founded by computer scientist Anthony Woodward, some 15 years ago. In 2006 Bulletproof released products dedicated to hosting and utilising virtualisation technology from VMWare, which slices up large, single servers for multiple customers to share – the basis upon which all cloud platforms operate.

It listed on the ASX in early 2014 via a reverse takeover, which caused scepticism. But the company has been achieving fast growth from its “managed public cloud” revenue, which trebled in the past year. This business sells cloud services via Amazon’s servers (AWS). Last year this division produced revenues of about $2.8 million, while this year they were $10.7 million.

“This year we have been vindicated. We made an investment and the profit growth has come,” says Woodward.

Ray Kinsella would be proud. Bulletproof doubled its workforce in 2014 and while it has a market cap of only $45 million, it’s got capacity, which in IT’s version of a baseball field.


About the Author

Richard Hemming

Investment analyst and Editor of Under the Radar Report

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