Why Tangoe's Shares Danced Higher

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of enterprise communications software provider Tangoe (Nasdaq: TNGO  ) had investors sashaying to the sound of 10% gains this morning, after post-close earnings on Wednesday beat the Street by $0.01 per share on the bottom line despite a light top line. Shares are now trading slightly lower as of this writing, but have held on to roughly 8% gains so far.

So what: Tangoe's EPS came in at $0.10 on better-than-expected revenue, which was $36.3 million versus analysts' expectations of $35.3 million. Full-year revenue is now expected to be between $151 million and $153 million, with $0.45 to $0.46 in full-year EPS. Tangoe also announced the acquisition of Symphony Teleca's Telecommunications Expense Management business for $41 million in cash. The deal closed on the same day as Tangoe reported earnings, so it's likely to begin contributing to results soon.

Now what: Tangoe hasn't become profitable enough yet to have a price-to-earnings ratio. The company will have to start generating substantially more net income to justify its current market cap in my eyes, but at least this trend seems to be heading in the right direction. I'll watch sadly from the sidelines for now, having missed out on the stock's doubling over the past year. Wedbush Securities and Stifel Nicolaus disagree with me, though, as both firms upgraded their price targets for the stock today.

Want more news and updates? Add Tangoe to your watchlist now.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more news and insights. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (3) | Recommend This Article (0)

Comments from our Foolish Readers

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  • Report this Comment On August 09, 2012, at 2:51 PM, investor68008 wrote:

    Alex - Did I miss something? Tangoe's revenue exceded all expectations and came in at $36.3M for the quarter (according to press release).

  • Report this Comment On August 09, 2012, at 2:51 PM, iheartdrop55 wrote:

    "Tangoe hasn't become profitable enough" is right. The only Foolish readers are the ones that think Tangoe will ever become profitable. There is no trend there except fuzzy accounting practices. Tangoe is really nothing more then a Ponzi scheme. Their business model has proved to not be profitable time and time again. They merely use investor money to acquire profitable companies and then claim those profits on their "trend" to "profitability". Meanwhile, Tech. talent in this acquired companies leave within the first 6-12 months of Tangoe's watch because Tangoe is nothing more then a sales engine and doesn't value technology. They have no platform of their own. Well, they do, it was called CMP and it was a huge failure. Java based, on top of licensed software vs the open-source model of the more profitable companies they've acquired. This is the main reason why Tangoe can't integrate any of these acquired companies into their "platform". In any event, Tangoe model drives these newly acquired "profits" back into the red but before that happens they claim the trend of profits and use that to acquire more investory capital and the cycle continues. This is the EXACT model Madoff used in his ponzi scheme and they belong in the EXACT same place Madoff wound up -- in jail. It's foolish to thing that just acquiring the "market" in terms of eating up all the market share somehow makes you profitable. That's kiddie talk.

  • Report this Comment On August 09, 2012, at 4:10 PM, TMFKlesta wrote:

    You're right, investor68008. Thanks for catching, and the story should be updated now.

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