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Voyant
International (VOYT) A Nano Cap With A Big Cap Potential
(Sept. 08)
We spoke to Voyant management and got an update and outline of their businesses.
Last June, some Voyant execs went on the road – actually, they took to the skies – to go visit some of the largest airlines and providers in Europe. When they told the story of an in-flight broadband connectivity solution that can deliver up to 35 Mbps to each airplane, the reception was tremendous.
We hear that every single airline they talked to agreed to sign a non-disclosure agreement just so they could hear more about the details of how Voyant’s system works.
Next week’s aviation conference should give VAB even more exposure.
Despite the high price of fuel, or perhaps because of it, all of the airlines are looking for new sources of revenue, and they also realize that having broadband on airplanes is about to be considered a “must-have” feature of their service. Reportedly, one of the airlines was quoted as saying, “bandwidth is like money: you can never have too much of it”.
This plays right to Voyant’s value proposition to the airlines: more bandwidth at a lower cost.
Last month, Voyant Aviation Broadband (VAB) and one of their technology partners demonstrated the technology that enables their aviation broadband solution on an actual flight.
After speaking to a couple engineers that were on the plane and involved with the test, we are not the only ones impressed with the technology in
Voyant’s $300m toolbox.
The VAB test included 2 types of video transfers from the airplane to the ground:
1. a pre-made video file (turns out it was a Lamborghini commercial) was transmitted from the airplane to the ground.
2. A live webcast (streaming video) was also transmitted from the plane to the ground. The kicker: the stream was an actual live webcast of the VAB test! A webcam on board was sending the feed to the engineers waiting on the ground.
Not only were the engineers amazed with the quality and speed of the connection, we heard that the distance that the plane was able to fly from the ground station and still keep a good connection made their jaws drop.
During the test flight, we hear that the pilots even used the VAB solution instead of their normal avionics communication system, because they found the VAB system worked better!
We hear the next test flight is expected shortly. We won’t be surprised if we see who Voyant is working with and more details on their website.
Remember the partnership between Voyant and Harris? Well, Harris is the largest supplier of communications equipment to the FAA…we’ll get back to that later.
U.S. Or Europe?
Will it be US or Europe that adopts the VAB solution first?
Some things that are making us think Europe.
1. Most of the airlines in Europe are much healthier financially
2. The European mobile market is much more advanced. There is also a big push for cell phone use on the planes. GSM can require a lot of bandwidth (Voyant’s forte).
3. Several major airlines and service providers in Europe have already taken great interest in Voyant’s solution.
4. AirCell, Voyant’s primary competitor in the US, has no play in Europe.
5. Europeans – especially northern Europeans – are used to having extremely high bandwidth connections. We think they’ll demand a lot of bandwidth on planes, too, again playing to Voyant’s strength.
We see Voyant probably launching a 1st generation Aviation Broadband solution in Europe, followed up with a 2nd generation application in the US.
AirCell is getting a lot of “airtime” in the US these days. We think that’s actually a good thing for Voyant.
Our opinion:
The press and consumers are easily impressed with AirCell’s solution for now because in-flight Internet service has never been available in the US before (except for on planes coming in from overseas).
As users start using AirCell’s service and the company has to share their limited bandwidth across several planes at once, we suspect that the connection will start to feel like old-fashioned “dialup,” and consumers will quickly voice their disappointment. That solution can’t scale…
Voyant Aviation Broadband's in-flight connectivity solution features an industry-leading bandwidth of up to 35 Mbps to each aircraft, independent of fleet size.
Remember the Internet player Prodigy???…yeah neither do we. That’s the same kind of scenario we see with AirCell. This aviation broadband solution is great when it’s the only game in town, but we feel the second in-flight Internet mouse gets the cheese WHEN THEIR SOLUTION IS 10 TIMES FASTER.
Just a little aside on comparative valuations:
One reason we think that Voyant is currently undervalued is that their market cap right now is less than 1/10th of what AirCell has raised (almost $250m). That means Voyant’s current valuation is ridiculously low, even if we only considered VAB.
Add to that all of the other Voyant businesses (RocketStream, White Space Radios, Voyant Productions) and their IP portfolio, and it becomes clear that there’s an enormous amount of yet-to-be recognized upside here.
That’s a scenario that any speculative investor should get excited about.
We see several potential joint venture opportunities for Voyant in this aviation broadband arena, and they all bring their own revenue models. Some examples include:
1. Internet and email connections (x amount per flight per user)
2. a “walled garden” (launch page with sponsored links),…think Wayport at every WiFi connection
3. in-flight e-commerce (share in any purchase ..think movies, songs or physical goods),
4. content distribution (Voyant Productions content, anyone?)
5. advertising (captive eyeballs, bored on long airplane flights).
Keep in mind that each of these users and models could probably be powered by RocketStream. We think that this could be the “engine” that delivers all of this content, too.
Remember Dana Waldman emphasizing that the goal of Voyant is to embed RocketStream in 3rd party applications? Well, what if that 3rd party is VAB? We love these cross-pollenization opportunities between different Voyant businesses.
Millions of captive eyeballs, the recurring revenue streams could be enormous.
Voyant already has one very deep-pocketed partner – Harris Corporation has over $5B in annual sales. CEO Dana Waldman mentioned at the last annual shareholder meeting that he intends to meet a series of corporate milestones to raise corporate valuations before raising much money, and they seem to be executing on that promise.
A little bit more on the Harris connection:
Now that Voyant’s got a partner and big-time “name” for their aviation broadband solution with Harris, the doors are opening much wider for these two. Not only do the algorithms on Harris’s software-defined radio work well with Voyant’s super-advanced modem technology, but this partnership saves Voyant a bunch of time to market and cash. Harris has invested billions of dollars over the years (courtesy of the government), and now this monster asset is put to work on Voyant’s behalf.
Remember we said engineer jaws dropped when Voyant did their aviation test? Well, we suspect that some of the engineers on the plane were Harris engineers.
We’ll give you a little background on Harris and what we see happening there.
In March, the National Security Agency awarded Harris a five-year, $41.6 million contract to build secret wireless networks for federal agencies, which would be interoperable with other military platforms. In the same month, Harris and Voyant teamed up to develop an aviation broadband solution. Coincidence? We think not.
Harris has explicitly stated they want to commercialize their defense technology.
In laymen’s terms, they want to take the gee-whiz government technology they sell to the government (FAA, military, etc.) and start creating commercial applications with it. That strategy makes Uncle Sam happy, since government dollars go toward building American businesses, and of course Harris gets to make more bucks along the way.
VAB is a posterchild example. (Another might be using RocketStream for video broadcasts for TV stations, which would be in keeping with the last few RocketStream press releases.)
Also, don’t forget that both Dana Waldman and Mark Laisure have a long history of spinning commercial ventures out of government businesses. A win-win for both. Harris benefits from Voyant’s expertise and as much as Voyant benefits from Harris’ technology and industry credibility.
Harris is building a Network Operations Center (“NOC”) for the government.
A NOC is a location from which control is exercised over a computer, television broadcast, or telecommunications network. Harris’s biggest customer is the US Government.
See how the $300m Voyant toolbox comes in handy?
Guess who is the largest mover of data over large distances?
Remember Voyant’s test flight, and how impressed the engineers were with the transmission distances? Harris is building their own “towers,” and that’s exactly what VAB will need for their ground infrastructure.
See where this could be going? Guess what technology makes transmitting over large distances from these towers back to the NOC a breeze? Yeah, you’ve got it: RocketStream.
Harris engineers were “Wow”ed with VAB (with both the speed and distances), the VAB solution was used instead of the normal avionics (Harris is largest supplier to FAA; Harris is building a NOC, the VAB solution will require few towers.
There are lots of opportunities for Harris to commercialize Voyant’s super-advanced modem technology and RocketStream. See the synergy?
We hear Harris has close to a dozen people in their lab working on technology related to VAB and have designated additional lab room for future projects. Don’t think the only reason Harris is working with Voyant is for VAB. RocketStream could play a huge role for their commercial and govt/defense businesses. We expect to see more news on this working relationship.
It is our opinion that Harris is quickly becoming more than just a tactical partner. There is a deep, strategic relationship building here.
Will history repeat itself?
Voyant’s relationship with Harris reminds us a lot of the history of San Jose-based Stratex Networks and their wireless technology. Voyant investors will be interested to know that one of the Board members of Stratex, which was acquired by Harris, was also one of the largest investors in one of Dana Waldman’s previous companies. See how the pieces are coming together?
It is our opinion that Harris is quickly becoming more than just a tactical partner. There is a deep, strategic relationship building here. Harris, one of the largest sellers of communication equipment is looking to commercialize their gee-whiz technology and Voyant is looking for a deep-pocketed partner that can immediately leverage their $300m IP portfolio.
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RocketStream:
While the Internet helped us to communicate with each other remotely, its creators never envisioned today’s massive data sizes and broadband pipes. Consequently, the protocols that power the Internet get bogged down easily, and that problem is getting worse every year. When we add in today’s trends towards globalization, the whole thing is heading for gridlock. What was needed is a
technology that takes geography out of the equation and unclogs these Internet pipes. Enter RocketStream.
In the first year after the launch of Voyant, the RocketStream team was busy building the RS product suite, getting it to run on different operating systems, testing the apps, establishing VAR channels -----FINDING MORE WAYS TO MONETIZE THE PRODUCT SUITE.
We continue to emphasize that RocketStream shines for countries and companies with “big pipes”.
RS is the Ferrari of Internet delivery.
Where does a Ferrari perform best? In a school zone (1.5 Mbps) or on the AutoBahn (100 Mbps)?
While the US is still filled with school zones (for now), Asia is turning into one big Internet AutoBahn for both corporations and customers. We like how quickly William Chen and the VARs are penetrating the Far East market, where the big pipes exist ALREADY.
Voyant’s VAR in China has hinted that orders are rapidly accelerating.
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YOU CAN TELL A LOT ABOUT A PERSON BY THE COMPANY THEY KEEP
Voyant continues to add to the Internet “Dream Team” with the addition of Silicon Valley legend, Jay Elliot and the timing is perfect. As big pipes get created/built in the US, embedding RS on/in them will be key to creating a continuous stream of new opportunities. Bringing Jay on board just as the US is creating big pipes is perfect timing for Voyant.
Jay took Apple’s Macintosh software from $200m to 1b in sales and directed Intel’s California operations. Yeah, he’s that big and he knows a thing or two about building an enterprise software powerhouse. His Roladex ain’t too shabby either.
I think his quote says it all: “Voyant is perfectly poised to exploit the intersection of media and technology with a unique combination of intellectual property assets, media industry contacts, and dedicated management team".
The size of corporate customers and the pace of their interest in both RocketStream and Voyant have grown rapidly since Jay came on board.
We have heard about several major telecom carriers that have been checking out RS. One specifically, Korea Telecom, after extensive field testing, has now endorsed RocketStream and is recommending the software to its business customers.
Korea has business customers with big pipes and they are recommending RocketStream to make maximum use of those pipes. This is huge for the RS in terms of credibility and potential sales. In one shot, thanks to some diligent business development work, RS is enlisting KT’s entire customer support department as part of the RS sales effort!
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All it takes is one, and this one could be a doozy
We’ve also heard that another very large telco recently requested quotes for an embedded version of RocketStream in staggering quantities.
They expressed interest in deploying as soon as humanly possible.
(NOTE)
If RocketStream can land such a contract, the annual revenues (both initial and recurring) from such a deal could be staggering, possibly exceeding the company’s current market cap.
This last example – an embedded play – exemplifies what the company always told us: that the discrete RocketStream product is just a prelude to the real purpose of the RocketStream technology: providing middleware to accelerate ALL KINDS of applications, both Voyant’s and those of other people. In June, the company already started delivering on that strategy with what we expect will be the first of many partners: Proginet.
If we think about the RocketStream technology from a strategic viewpoint, this is a technology that is all about content delivery.
RocketStream single-handedly slays one of the big dragons impairing content delivery today: network latency.
If you want to get an idea how much the Internet industries value that kind of technology, think of the over $1B content delivery market. And within that industry, it wasn’t long ago that market-leader Akamai acquired Netli for over $170m gives. Netli was an application acceleration provider.
RocketStream broader mandate to accelerate all types of Internet traffic gives us great confidence that its ultimate value should compare even more favorably.
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Managed File Transfer ---Proginet
The partnership between RocketStream and Proginet is turning out to be a win in many ways. Proginet’s products are already on tens of thousands of servers at Fortune 500 companies around the world, but now will be powered by the world’s most advanced proprietary Internet transfer protocol.
What wasn’t discussed in the press release is that this deal has Proginet using their money and manpower to essentially create a separate RocketStream “agent” that contains the core of the RocketStream transport magic and remains the property of Voyant.
This agent lets software developers plug RocketStream into their own applications (after paying RocketStream, of course). This is a huge development for RocketStream and Voyant.
Plug in the agent, and Voila!, your application is powered by RocketStream. Instead of a PhotoShop, or an iTunes, writing their own software code to transfer data, they just plug in the RocketStream agent. Remember the connections Jay Elliot has?
Hello, middleware. Let the licensing revenues begin!
Voyant/RocketStream can then easily sell this “off the shelf” RocketStream agent to all kinds of software companies. ---THIS IS A BIG sales catalyst.
“Intel Inside” is synonymous with powering a PC. “powered by RocketStream” can be synonymous with fast Internet delivery.
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Evidence of the revenue ramp
Revenues from the Proginet relationship have already started to roll in, and we expect revenues from other companies’ purchases of the agent to start later this year.
Revenue growth ..1st qtr 15k, 2nd qtr 133k
Revenue grew 5-fold from prior quarter and while they’ve only just broken 6 digits for a quarter, they are getting into some high-profile scenarios, having now moved data for the Olympics, American Idol, the Space Shuttle, and head-of-state visits. They’ve penetrated some potentially lucrative market verticals, most recently the legal field (“eDiscovery”), medical/dental imaging, and broadcasting. Voyant press releases.
We expect several more big-name customers to validate and deploy RS this quarter, and indeed the company has already hinted at a few big names. Industry giant Weyerhaueser is just the latest Fortune 500 company on RocketStream’s customer list.
We also hear the RocketStream lab has been pretty busy creating new applications that use the RocketStream engine.
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White space radio
getting white hotter
We have been watching white space radio for a while and feel it represents a white-hot opportunity for Voyant
The company has not disclosed who their first customer is, but the deal is worth over $2m. The only info we were able to find is that the radio will be used for a power-efficient utility management solution. The customer feels this WSR solution could provide up to 40% energy savings, which could represent multi-billions of dollars, depending on who the customer is.
The initial order is for both development of the radios and delivery of a hefty 3000 units. (Just like in RocketStream’s Proginet deal, the customer here is picking up the tab for not just the products they’re buying, but also for the development of the product in the first place. Voyant’s sales guys must be some pretty shrewd negotiators!)
What we like:
Their customer wants their technology so badly that they are paying for its development.
Voyant is building an entire business unit around this solution. That leads us to conclude that they consider this to be a pretty significant opportunity, and we agree. The new spectral white space is a whole new frontier in wireless communications, and companies that get in on the ground floor now will get to define how this landscape develops.
As a strategic provider of key technology that opens this frontier, Voyant stands to create HUGE REVENUE STREAMS. Product sales are just the start. White space radio services and technology licensing could be even more lucrative.
Remember Dana Waldman’s quote last year on the white space opportunity?
“What Qualcomm and their modulation techniques (CDMA) did for the cell phone spectrum (standard) is what Voyant can do for the 700 MHz, white space spectrum”
FCC Provide New Wireless Opportunities For Voyant (pdf)
The possibilities are practically endless.
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What’s Next: Content Delivery As A Service “CDaaS”?
One of the exciting things about Voyant is the way their businesses fit together to address multi-billion-dollar markets. These guys pride themselves on being able to morph undervalued tech and turn it to new uses. If we look at what they’ve done, the sandboxes they play in, and the newest faces on the management team, we can make some educated guesses about where they might go next.
Think about this: Online searching, selling, advertising, and purchasing all created multi-billion dollar companies. The next logical Internet frontier crying out for a major overhaul is Content Delivery. That’s a big arena where Voyant’s RocketStream technology is becoming established.
With RocketStream’s technology and Voyant’s seasoned management team, a multi-billion dollar Content Delivery tech company could be forming right under our noses. This is exactly how giants like Google, Microsoft, Broadcom, Cisco etc. were formed.
The “Fedex of the Net”….”when it absolutely, positively HAD to be there”
RocketStream can address the content delivery space in many ways. They’ve already started with a discrete product and with a compelling middleware play. One next logical step could be a service play. Think of RocketStream as the “Fedex of the Net”. They’re actually in a position to pull off a play this ambitious!
RocketStream as a delivery service could provide some significant revenue traction and increase recurring revenues.
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Management has a solid track record of delivering on their promises. CEO Dana Waldman mentioned at the last annual meeting that the company has laid out a set of milestones for progress. Since then, they’ve been ticking them off, one by one. A VAB flight demo, a 5X RocketStream revenue increase, a $2m WRS contract. These are all signs of steady hands on the tiller that deliver what they promise.
Some golden nuggets:
Adding Jay Elliot to the management team adds even more credibility and is a homerun in our book. He comes at a time when RocketStream is poised for a big run in the Internet software world. He is talking to the big names we have mentioned several times in our prior reports.
It is our thinking that by the 4th qtr RocketStream will be a well-established brand and have established a hockey-stick curve in its revenue growth. The “agent” developed by Proginet will be on the market within the Proginet products themselves and will expedite further 3rd party embedded deals.
Also, we expect to see continued evidence of VAB progress. We are looking for more technical demonstrations, as well as traction with airlines, telco service providers, and other aviation industry partners. The existing partnership with Harris was a big first step, and it brings credibility as Voyant puts other alliances in place. The first domino has already fallen.
We hear that management is deep in talks with other companies associated with aviation broadband and in-flight entertainment. These companies understand that the real revenue growth from in-flight connectivity comes from providing “big gulps” instead of “sipping the Internet through a straw”. Partnerships with some of these establish aviation-industry companies will only accelerate the introduction of VAB’s ultra-high-bandwidth solution into a market that is projected to reach $1B within four years.
Beyond just in-flight connectivity, Voyant is positioned to go after the entire in-flight entertainment (IFE) market. Now we’re talking about a market that’s already reached multiple billions of dollars annually.
Here’s a simple example of how Voyant could penetrate the Aviation entertainment industry overnight. You know those movies they play on planes? Well their method of delivery is archaic. They ship hard drives to each airport, costing hundreds of thousands of dollars. With a high bandwidth pipe (VAB) and latency-neutralizing software (RS), they could transmit those movies to the airplanes anytime they want, even will cruising at 38,000 feet. Updates anytime…
Voyant headquarters tells us that the digital TV mandate is also creating some big opportunities for RS. Not only will servers have to move digital videos across the country,
so too will every TV station. Remember their focus on embedding RS into 3rd party apps? Video processing will play a key role. We hope to hear more on that soon.
We suspect that we’ll also hear more from Voyant’s white space radio business in the 4th quarter as the Feb 09 digital TV deadline approaches. We believe that the company’s first contract will have moved from development to unit delivery by the end of the year, freeing up resources for their “Act II” in this business.
We are seeing a continuous pattern not often found in nanocap companies. Voyant management is leveraging their customers and partners to fund (with manpower or capital) new product development. They are also focusing on ways to maximize RocketStream’s content delivery opportunities. These attributes keep them on the leading edge of technology in a way that other companies of this size could never achieve.
Essentially, this means that an investment in Voyant enjoys a multiplication of resources. Investors get the benefit of not just the Voyant employees and IP, but also the benefits of an entire network of partners, customers, vendors, and industry insiders. This network continues to grow, most recently with the addition of Jay Elliot (bringing Apple, Intel, and IBM to the table.
While Voyant is just beginning their revenue ramp, we are encouraged by the current trajectory.
We think they’ve done an excellent job sowing the seeds of the growth that we’re now beginning to see. They have a solid software product upon which to build middleware and SaaS plays, their large IP portfolio seems to be creating interesting, new opportunities, such aviation broadband and white space radios.
We think that management will have their hands full growing these current businesses while evaluating and adding new ones, but that a key element to their strategy of being a combination investor/incubator/operator/holding company.
As we stated in our initial report titled The Next Generation Internet Holding Company
"Very rarely, if ever, do we find a way to invest along side with some of the smartest investors in Silicon Valley, at a fraction of the cost, in a publicly traded vehicle, run by execs with billion dollar track records AND on the verge of generating revenues for various new/existing multi-billion dollar markets"
We see Voyant International (VOYT), as a nanocap with bigcap potential.
VAB – Voyant Aviation Broadband
RS – RocketStream
IP- Intellectual Property
SaaS- Software as a Service
VAB – Voyant
Aviation Broadband
RS – RocketStream
IP- Intellectual Property
SaaS- Software as a Service
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