M Partners tech analyst Ron Shuttleworth appeared on BNN’s “The Close” this week to share his top picks. One of his recent coverage adds is a company with a long history in Canada, Ottawa’s Mitel (TSX:MNW). After a rough Nasdaq IPO in In April of 2010, Mitel returned to Canada recently, listing its shares on the TSX on June 27th.
Shuttleworth, who has a $7 target on the stock, says Mitel has gained momentum of late, beating consensus estimates as well as their own guidance with a recently reported Q4 in which it earned $49.8-million, or $0.89 cents a share, on revenues of $157.6 million.
“The Close” host Michael Hainsworth pointed out that what most people know about Mitel is Terry Matthews, the billionaire telecom legend who has founded dozens of companies is the telecom space. But Shuttleworth says the real story of Mitel these days is new CEO Rich McBee.
Shuttleworth says McBee has come in and rebuilt Mitel from the ground up as an organization focusing on channels. Shuttleworth says the Mitel boss has positioned the company to succeed through these channels by leveraging its leadership role in virtualization, where he says it has “a better mousetrap”. In a recent research update to clients, Shuttleworth said Mitel competitors such as Avaya are still struggling with the transition from hardware to software.
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Rich McBee was named CEO of Mitel on January 17, 2011. He came over after serving as President of the Communications & Enterprise Group at Washington DC-based conglomerate Danaher. At Danaher, McBee was responsible for annual sales in excess of $700 million from from carrier, enterprise, and server message block markets, through both direct sales and channel partners.
In a recent conversation with Cantech Letter, McBee said his focus on the public markets side of Mitel was to gain back credibility the company lost after its IPO, which saw the company slip from $14 to nearly $2. McBee says he feels that now that the company has outperformed guidance for the fifth quarter in a row, that is beginning to happen. “I have a tongue in cheek saying about stocks” said McBee. “At the end of the day it’s fair market value, plus greed, minus fear. And gaining credibility by executing eliminates fear from the marketplace so people can begin to see the true value of the company.”
At press time, shares of Mitel on the TSX were even at $4.55.