01 Communique rated STRONG BUY by Global Maxfin; $3 target

Global Maxfin Capital analyst Ralph Garcea initiated coverage of 01 Communique (01 Communique Stock Quote, Chart, News: TSX:ONE) on Wednesday with a $3 one year price target and a STRONG BUY rating.

Garcea says 01 is currently in litigation over its ‘479 patent with two major players in the remote access markets, and these lawsuits could be hundreds of million of dollars to the company.

He says the company’s case against LogMeIn could be worth $100-300-million, and its actions against Citrix could be worth $300-600-million. These cases, says Garcea, are two of 01 Communique’s most high profile targets, but there are many more.

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Garcea says last year’s settlement with Bomgar illustrates that 01 Communique is in a strong position to monetize its intellectual property, and the Global Maxfin analyst believes the company can win its case against LogMeIn, which began this past Monday. He notes that ONE is working with one of the U.S.’s top IP firms, Baker & Hostetler, which has 16 lawyers present at the trial.

01 Communique was founded 1992, when it released a a fax program called 01 Fax. The company began developing remote access software in the late 1990′s, and filed for patents related to this technologies in 2000. 01 was subsequently granted two patents in August, 2005. Although it was the first company to actually be granted patents for remote access, other companies such as Citrix and Bomgar won the space, prompting 01 Communique to explore legal action around its intellectual property portfolio.

The global market for remote access products is rising sharply, says Garcea, spurred in part by the global rollout of 4G/LTE networks. He estimates that the combined market for remote access and support should exceed $1-billion annually by 2016. The analyst believes the market will continue to be dominated by deep-pocketed players such as Cisco, Citrix, and LogMeIn.

A typical settlement, says Garcea would include two components; a royalty rate going forward, which could be anywhere from 2% to 20% of total revenue generated, and a lump sum payment. In the case of LogMeIn, he estimates that it has generated more than $400-million in revenue since mid-2005, and a lump sum settlement would be in the range of $25-$75-million, more if the judge in the case deems the infringement as willful.

At press time, shares of 01 Communique were up 2.1% to $.99.