Friday, February 9, 2007

ONSM- Big News on the Horizon?


My purchase of 5K shares the day before ONSM broke out was definitely one of my better trades so far this year. After forming a symmetrical triangle, there was a series of days where ONSM traded in a tight range, making lower highs and lower lows. Then on Tuesday, it make a higher high and higher low, relative to the previous 4 days. As I saw this happening Tuesday, it felt like a good entry point.

ONSM continues to show a great deal of strength after its breakout, even while the rest of the markets struggle for direction. This type of strong trading always makes me wonder what is going on behind the scenes to keep the buyers coming in droves. I have found a couple of interesting tidbits which might explain why all the buyers are beating down ONSM's door.

First, back in December ONSM put out this PR.

Then we have this Cisco news out today.

It seems to me that ONSM is now a partner with CSCO to enable social networking and deliver online video and multimedia content.

I can not help but believe this is HUGE news, but based on today's action and volume, I'm wondering if the story leaked to the street a few days ago when the stock broke out. It is also possible only a few traders have connected the dots and the story needs more time to be digested.

I will be watching this one closely over the next week.

***UPDATE*** Sunday February 11th, 10:45 pm

I spent a good part of the weekend attempting to uncover what the possible relationship with Cisco might mean for Onstream Media Corp. Cisco's conference calls were not much help. What was helpful was this article:

Cisco's Vision for the Evolution of Video Communications and Entertainment:
Mike Volpi discusses the strategic importance of video in communications and media markets.


If you want to listen to a similar presentation, try these:

The Future of Video and TV
SVP/GM Mike Volpi on the Evolution of Video, Television
December 12, 2006 - SVP/General Manager Mike Volpi explains how the consumer demand for customized, personalized connections is shaking up the world of video and broadcast television.


Part II - SVP/GM Mike Volpi on the Evolution of Video, TV
December 12, 2006 - Part II: SVP/General Manager Mike Volpi explains how consumer demand for customized, personalized connections is shaking up the world of video and broadcast television.


There is a good bit to digest from the above links. I will do my best to paraphrase the key points as I feel they relate to ONSM.

  • Cisco wants to integrate TV, Internet, and Video over Internet
  • This intergration will be about "ME" which is to say that the consumer will decide when and where and how they are delivered their content of choice.
  • Cisco will provide the network as well as provide the platform and technology to integrate TV / Internet / Video over Internet
  • One of the critical pieces is the ability to search for videos
  • Another critical piece is for Cisco's clients to have a network and platform from which they can create user generated video content as well as participate in social networking
Onstream Media's latest conference call for their Q4 and FY 2006 is here.

There were several interesting areas in the call that may point to a future relationship with Cisco.

  • Onstream Media is the “Premier Platform for the management of rich media content.”
    This includes broadcasters, publishers, and user-generated content.
  • …Fast convenient access to search video of all types including news, weather, sports, movie trailers, music, and more.
  • "Our overall focus is to continue to deploy the company’s development efforts towards the anticipated integration of internet and television thereby enabling our clients to more effectively monetize their content and increase viewer stickiness."
  • Convert speech within video to text to greatly improve the accuracy of video search by users.

As for Five Across, the company just acquired by Cisco:

  • "Onstream Media is working with Five Across on several social networking projects where Onstream will provide the technology for managing the user generated content of the networks."
  • Onstream goes on to say in the Q&A, "The Five Across relationship is one of our most critical relationships. As a provider of social networks Five Across is the best in the business, that’s why we partnered with them.”

If you want to skip to what I feel are the most important parts of the CC, I would listen to the second question, as well as to the question at 25:00 (about the meeting of internet and TV) and 34:05 (about the relationship with Five Across).

So What Does All This Mean?

The explosion of video on the net and the subsequent upgrades of networks to handle the increased bandwith will undoubtably be good for Cisco's business. But the real story here is that Cisco seemingly is vying to lead the integration of TV/Video/Internet both through development of the networks but also through software and new platforms for the user to produce, manage, and distribute content. A key feature for both business and home integration of TV and Video/Internet is the ability to effectively search for content. ONSM seems to have a robust search feature which allows one to generate text from video which makes for more accurate searching. Cisco's purchase of Five Across speaks to their desire to target the social networking explosion. ONSM's Digital Media Services Platform allows the potential users of social networks, whether they are teenagers or professional broadcasters, to publish video with one click.

Finally, both ONSM and CSCO are striving to integrate TV/Video/Internet. The recent purchase of Five Across by Cisco bodes well for ONSM's future. ONSM's platform seems to provide the functionality Cisco needs to provide full service video capabilities to the users of their networks. However, I can not determine from information available to the public at this time whether there will be any future for Onstream Media as a partner or more with Cisco.

I will be making a call to both CSCO and ONSM investor relations on Monday and will publish anything I find out.

4 comments:

Broker A said...

Good stuff, but find out more.

I order you to listen to the last 4 conference calls. Take copious notes and update this fucking report tomorrow.

BTW: I ma throwing your link back up.

Woodshedder said...

10/4 Fly.

Two questions. Can those CC's be the last 2 of each co. Or should it be the last 4 CC's of both ONSM and CSCO?

Broker A said...

How much revenue does ONSM do and what percentage derives from CSCO?

Looks good.

Woodshedder said...

Revs in FY06 were 8.4 million. Hard to say how much derives from CSCO. I'd estimate none to very little. One thing to determine is if CSCO will honor ONSM's partnership with 5 Across.