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Falanx - small bolt on announced but not the big picture - that's next week

By HotStockRockets | Thursday 6 July 2017


Disclosure: Financial Investigative Media Limited, which is not owned by Tom Winnifrith but by a trust for his dependants, owns shares in companies mentioned in this article. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


Falanx (FLX) has announced that it has bought Cloudified Limited for £180,000. This is a small beer deal.For what will really get the shares to sizzle higher we must wait a few more days.

We are told that:

"Cloudified is a profitable Software Defined WAN (SD-WAN) vendor specialising in building cost effective Wide Area Network solutions for SME's, has provided its products to major telcos and ISP's, such as BT and Daisy Plc. Having benefited from the investment of £0.5m in the development of its IPR, Falanx bid to acquire its unique assets and contracts, which having achieved a profit of £3.7k and revenue of £12k in the year to 31 May 2017, the Board recognised as significant shareholder value. The Board decided to acquire on the basis of being able to utilise the Cloudified technology in the MidGARD platform, grow the existing SD-WAN accounts and acquire the exceptional software development team."

Ends
On the surface of it that is not exactly earnings enhancing but we are told that "Cloudified's technology stack brings a significant amount of additional IPR to Falanx's development program. Cloudified's core connectivity technology and data management and monitoring platform complements Falanx's MidGARD. The acquisition of these technologies allows Falanx to significantly accelerate the launch of its SME-focussed offering, MicroSOC."

Ends

So there should be synergies which make the deal stack up. Let us hope so. The consideration is £80,000 in shares at 7.125p which are locked in for two years and the rest in cash.

In the greater scheme of things this is probably small beer. What matters is how the core business is doing. We believe it is doing very well indeed and we expect confirmation of that with results on the 11th of this month. Hold tight at 7.25p-7.5p for then. We still expect to be selling at 10p plus before too long.

This article first appeared on HotStockRockets - to catch the next red hot share tip from the HotStockRockets team out shortly as well as two SCORCHERS we tipped on FRIDAY 30th June, for just £5 click HERE


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