Current market prices invite even start-up companies to make more complex strategic moves than usual: acquisitions, for example. Sources inform "Globes" that cVidya Networks, which develops revenue assurance solutions for the telecommunications industry, is in talks to buy ECtel (Nasdaq: ECTX). ECtel has a market cap on Nasdaq of $7.5 million, which is low even in relation to the amount of cash the company has.
cVidya, which was founded in 1999 by Alon Aginsky, provides solutions designed to prevent revenue seepage from telephony and Internet providers. Its MoneyMap product finds overlooked debts, inaccurate pricing, and non-revenue producing equipment on the network. The company has been selling for several years, with annual revenue in the millions of dollars. 2008 sales were $10 million.
cVidya and ECtel compete in certain segments of telecommunications solutions. They both bid in the first quarter this year in a tender in Latin America that cVidya eventually won. cVidya's latest fund raising round was at the beginning of 2008, when it raised $12 million, with a further $5 million in capital coming from venture lending firm Plenus in April. Altogether, cVidya has raised $30 million from Battery Ventures, Carmel Ventures, Hyperion, Stage One, and STAR Venture.
Among ECtel's customers are AT&T, and Russian telecommunications provider Rostelecom. The company has not managed to be profitable in recent years, and made a loss of $1.4 million in the first quarter of 2009. Discounting its cash, which amounted to $14.8 million at the end of the first quarter, it has a negative market cap.
When the 2008 financials were published, ECtel president and CEO Itzik Weinstein said, "As we go into 2009, our clear goal is to preserve cash, but without compromising on our development or growth targets, and with a forecast of breakeven in the second half of 2009."
Published by Globes [online], Israel business news - www.globes.co.il - on July 8, 2009
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