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Monday, December 13, 2010

TCCO Blow out Earnings as predicted

Press Release Source: Technical Communications Corporation On Monday December 13, 2010, 8:30 am
CONCORD, Mass., Dec. 13, 2010 (GLOBE NEWSWIRE) -- Technical Communications Corporation (Nasdaq:TCCO - News) today announced its results for the fiscal quarter and year ended September 25, 2010. For the year ended September 25, 2010, the Company reported net income of $7,868,000, or $4.68 per share, on revenue of $21,551,000, as compared to net income of $943,000, or $0.65 per share, on revenue of $7,752,000 for the year ended September 26, 2009. For the quarter ended September 25, 2010, the Company reported net income of $3,176,000, or $1.74 per share, on revenue of $6,861,000, as compared to net income of $235,000, or $0.16 per share, on revenue of $1,765,000 for the quarter ended September 26, 2009.

The Company also announced that on December 9, 2010, its Board of Directors declared a dividend of $0.10 per share of common stock outstanding in recognition of the positive financial performance of fiscal 2010. The dividend is payable in cash on December 27, 2010 to all shareholders of record on December 20, 2010.

Commenting on corporate performance, Carl H. Guild, Jr., President and Chief Executive Officer of TCC, said, "TCC had a record year in fiscal 2010, far surpassing any year in its 49 year history. The primary driver for our growth has been the need for encryption equipment to provide secure national communications in Afghanistan. TCC made substantial shipments on contracts supporting this endeavor through the fourth quarter of fiscal 2010. The fiscal 2010 contracts have been followed with additional orders in the first quarter of our 2011 fiscal year. It should be noted, however, that while the continued business in Afghanistan is encouraging, our revenue in fiscal 2011 is expected to return to the more modest levels achieved prior to 2010. Our backlog at September 25, 2010 remained strong at $3.4 million and increased to $6.8 million during the first quarter of fiscal 2011. The Company expects to deliver these orders during the remainder of our fiscal 2011 year.

Mr. Guild continued, "For fiscal 2011, TCC expects to maintain its increased investment in internal product development. We are evaluating several technical options for enhancing the DSP 9000 Radio Encryption product line, which may include cryptography modifications, hardware and software changes and partnering with radio manufacturers to incorporate imbedded solutions. The Company also continues to evolve the features of the DSP 9000 RF Encryption System and hopes to expand the market to new customers that can benefit from a universal security solution that can be applied to and interoperate with their existing radio communications suite of equipment."

In October 2010, TCC announced the introduction of the DSD 72B, a new family of high speed SONET/SDH encryptors capable of operating on electrical and fiber optic networks. These encryptors are designed to meet a wide range of stringent environmental and operational environments while providing the highest grade of encryption security. In conjunction with the DSD 72B, TCC has developed the Keynet Optical Manager (KOM)(TM), an advanced key generation and management system capable of single--point, over-the-network management of an entire encryption network. TCC expects that customer evaluations of the DSD 72B will begin in 2011.

Driven by current customer demand, TCC has also completed the development of a variant of its DSD72A-SP Bulk Encryptor, which will provide additional radio/switch interface compatibility. Finally, the Company also expects to expand its CX7000 family of IP and frame sensitive encryptors in 2011 and 2012 to provide additional features and higher speed solutions for enterprise networks and satellite communications systems requiring tailored operational and network characteristics.

Friday, December 10, 2010

Will TCCO make a monster run like TASR?

In this article, after they received the $9.7m Order for Afghanistan Radios, officials said 2010 sales would be $20m. Read Article

For the 9 months ended June 2010, they had recorded $14.6m of sales and $2.72 of EPS. That means the 4th quarter could be $5-$6m of sales. Q3 ending June 2010 has $6.3m of sales and $1.29 of EPS. Q4 could be approximately $5-6m of sales and $0.80-$1.30 for the fourth quarter. That would leave them with EPS of $3.52-$4.02 for the year and a P/E of 3-4 even with the Friday close in the $14’s. Imagine $3.50-$4 EPS with any kind of decent P/E? From what I read in the last 10-Q they still have over $3m of tax loss carryforwards. The comparable they are up against from last years Q4 is $0.16 EPS. So If my numbers are close to being correct, we could see a headline such as $0.80-$1.30 EPS vs $0.16 in the prior year quarter.

They have said that business was exceptional this year because of the April order of $9.7m for Afghanistan. However they have since received two orders totaling $5.2m for 2011 in Afghanistan and are rolling out new products.

Per the Company, “Backlog at June 26, 2010 amounted to $10,060,000. The orders in backlog are expected to ship during the 2010 and 2011 fiscal years depending on customer requirements and product availability.” Since then they have received the additional $5.2m in orders.

Read 10-Q

With only 1.8m shares o/s and a float of 1.4m, with this EPS and the strength of this sector, it is easy to see why this could become a monster momentum stock. This is a US company founded in 1961 with a P/E of 3-4 and a clean Balance Sheet.

Here is a great article I found on the Company. Read Article

They report Monday morning. Management is always cautious with guidance. They say Earnings could return to a normal level without Afghanistan. However Afghanistan orders are continuing and they are rolling out new products. AAPL also sandbags guidance every quarter. If my number estimates are remotely correct this could be the beginning of a monster run and a new momentum stock and I will add. If I am wrong (and I could be missing something? Taxes?), my average is in the $12’s - so there you have it.

Monday, December 6, 2010

In TCCO WikiLeaks Play - Undiscovered Low Float w/ Monster EPS ($3-$4 this year) & Strong Theme - Secure Government Communications

TCCO - USA Company with 3-4 P/E
Float 1.4m O/S 1.8m See Share Statistics

With the WikiLeaks scandle TCCO may be a great play as it specializes in secure government communications. (As well as secure mobile and texting to be rolled out to other phone platforms)

Secure Communications has been a very strong theme and APKT has been a monster stock with a 50 P/E for next year's EPS estimates.

EPS for the first 9 months of 2010 $2.72 See SEC Filing

Dividends paid for the first 9 months of 2010 $2.21 per share

EPS for Q3 $1.29 See SEC Filing

Last Press Release

Strong Balance Sheet See Balance Sheet

TCCO is thinly traded so not for chasing or large positions. Not a fast or day trade for me. I think it can at least double in the next 1-12 months from the $12 level it is at now. Please keep in mind that they are due to report year end results early next week, I believe Monday or Tuesday. Holding any stock into earnings can be high risk high reward.

TCCO has conservatively said that this years results were much higher due to $9.7m in orders they received for Afghanistan in April 2010 for this year and early next year, however they have already received $5.7m additional orders for next year and are about to roll out several new products.

Orders for Afghanistan are continuing into 2011:
Read Press Release
Read Press Release

Mobile Prduct Line - The products comprising the CT8000 secure wireless product line will likely continue to evolve and respond to new customer requirements. It is also expected that CiperTalk Secure Voice encryption and CipherSMS Secure Text Messaging will be applied to additional mobile platforms and that customer-specific features will be developed.

TCC designs, manufactures, and supports superior grade secure communications systems that protect highly sensitive information transmitted over a wide range of data, voice and fax networks. TCC's security solutions protect information privacy on every continent in over 115 countries. Government agencies, militaries, financial institutions, telecommunications carriers and multinational corporations worldwide rely on TCC to protect their communications networks.

Technical Communications Corporation designs, develops, manufactures, distributes, markets, and sells communication security devices and systems worldwide. Its products are used to protect confidentiality in communications between radios, telephones, facsimile machines, and data processing equipment over wires, fiber optic cables, radio waves and microwaves, and satellite links. The company’s products include High Speed Data Encryptor, which provides cryptographic security for data networks; Narrowband Radio Security family of products that provide security for voice and data communications sent over HF, VHF, and UHF channels; and Secure Telephone, Fax, and Data system that provides voice, fax, and data encryption in a telephone package. It also offers Secure Portable Telephone Attachment, which provides digital security between telephone and handset; Fax Security System, an automatic transmission fax system that connects to facsimile machine; Executive Secure Telephone, which offers voice and data security in a telephone package; and CipherTalk8000 and CipherSMS secure wireless products to provide encrypted mobile communications. In addition, the company provides CipherONE family of Network Security Systems, which consist of hardware and software-based encryption products for local area network, wide area network, and Internet applications, as well as a network security management system. Further, it provides Frame Relay Network Encryptor, an end-to-end frame relay encryption system; IP Network Encryptor for encryption security at the Internet protocol layer; and KEYNET Network Security Management System, a Windows NT-based key and security device management system. The company markets its products to governmental agencies, law enforcement agencies, financial institutions, and multinational companies requiring protection of mission-critical information. Technical Communications Corporation was founded in 1961 and is based in Concord, Massachusetts.

TCCO is thinly traded so not for chasing or large positions. Not a fast or day trade for me. I think it can at least double in the next 1-12 months from the $12 level it is at now. Please keep in mind that they are due to report year end results early next week, I believe Monday or Tuesday. Holding any stock into earnings can be high risk high reward.

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