New York, NY, Point Roberts, WA - July 26, 2011 - Investorideas.com, an investor research portal specializing in sector investing including tech stocks presents a Q&A with Josh Levine of the MicroCap Investor newsletter. He discusses why Elephant Talk Communications, Inc. (OTCBB:ETAK) and its wholly-owned ValidSoft subsidiary are capable of scaling revenues to a billion dollars and more within four years.

 

Investorideas.com Interview:

Q: Investorideas.com

Josh can you tell investors when you first started researching and following Elephant Talk and what caught your attention?

A: Josh Levine, MicroCap Investor (http://www.levinesmicrocapinvestor.com)

When I go down my checklist of requirements for microcaps, Elephant Talk rates an "A" for each important item. But for all of the impressiveness of its technical capabilities, one characteristic that I find especially appealing is the sheer determination of its management to take on the very complex challenges of making it all work.

My initial recommendation for ETAK was in October 2009 at $1.39. A few weeks ago, the shares traded to new highs above $4. Despite the very speculative nature of the stock in late 2009, I wanted our subscribers to start building positions early because I had confidence in management's ability to execute on its ambitious growth strategy. If fully successful, the returns will be like a big venture capital winner - 10, 20, 30 times our investment.

When I first met with Elephant Talk's management and researched the company, management was in the process of completing its acquisition of ValidSoft. A critical part of the story is that Elephant Talk provides ValidSoft access to the telecom networks it could not otherwise get on its own. It took many months to make it official, but there was little doubt that it would be done and that it would transform the company.

In the meantime, Elephant Talk was establishing itself as a provider of a software services platform for the telecom industry. Today, Elephant Talk is at the center of a powerful wave in the telecom industry that is transforming the way businesses and organizations like supermarkets, banks, and government agencies connect with their customers. A lot of new businesses will be using the cloud by becoming mobile virtual network operators (MVNOs) to have a two-way discussion with their customers and communities.

Most major telecom companies are ill-equipped to operate on this level and prefer to outsource these operations. As a mobile virtual network enabler (MVNE), Elephant Talk serves up a full mobile operation out of a box. There is no need to build out spectrum and antennas because they are simply rented from mobile telecom operators such as Elephant Talk customers T-Mobile Netherlands and Vizzavi Spain, part of the Vodafone Group.

This is a huge global opportunity for Elephant Talk which extends from Europe, Asia and the Middle East to South America. Already, MVNOs have 85 million subscribers, according to the research firm Informa Telecoms & Media, with rapid growth continuing. The firm predicts that total revenues for MVNOs will climb to $80 billion per year by 2012.

Now, as huge as this business will be for Elephant Talk, it is ValidSoft that is going after an even bigger market opportunity.

Q: Investorideas.com

In your last ETAK update, you talk about the $ 20.5 trillion global market for in-store retail transactions that Elephant Talk and its ValidSoft subsidiary are targeting. What percentage of that market do you think they can capture?

A: Josh Levine, MicroCap Investor

This figure represents the total of all payment transactions that occur in stores around the world each year. As payments and other transactions such as banking move into the mobile cloud, Elephant Talk and ValidSoft will provide security and services solutions to the big players in this space as it emerges, including the banks and credit card companies, and telecom carriers. Of course, Apple (AAPL) and Google (GOOG) are vying for slices of this pie and are in a strong position to influence the market as it develops.

ValidSoft will generate revenues on a per transaction basis, so even at pennies for each transaction the company could scale to immense levels very rapidly.

In a recent presentation, ValidSoft CEO Pat Carroll points out that the growth of Near Field Communication (NFC) and "tap and go" payments using cell phones -- rather than credit cards -- would lead to a five-fold increase in electronic transaction volumes. It would also be advantageous for ValidSoft's multi-factor authentication approach to fraud prevention.

As NFC chips become increasingly embedded in smart phones and other devices and gain traction worldwide, the stakes get larger. A BusinessWeek article explains: "As this technology takes off the cell phone could become the central repository of not just bank account information but coupons, loyalty points, and membership cards, allowing companies such as Google to route deals to cell phones at just the right time and place."

As these trends unfold, a major portion of marketing is going to go through this personalized media channel. Retailers will be able to gather more point-of-sale data from their customers, while Google sees big dollars in helping retailers target customers with personalized, real-time deals and offers.

Q: Investorideas.com

Josh, with your focus on developers of advanced technologies for your portfolio, as you identify new companies to recommend, what trends are you watching to find the next microcap stock with the same kind of upside potential as Elephant Talk?

A: Josh Levine, MicroCap Investor

Small firms have the ability to concentrate on high-value-added processes and products where sophisticated scientific and technical knowledge are paramount. As a result, the microcaps that execute deliver wonderfully high margins and profits -- and fantastic returns to their investors.

By participating in transformational changes in the highest-growth industries, any microcap that successfully navigates the path from R&D to commercialization and beyond will emerge a big winner. There are no better sectors to find these companies than in biotechnology and medical technologies, cleantech and renewable energy, and advanced IT and networking technologies. These are the areas on which I focus most of my attention.

Elephant Talk is among the "game changers" in our current portfolio. These are companies capable of making a serious impact on an industry with new technologies, products or therapies - and delivering returns of five to 10 times or better. I am monitoring several exciting prospects these days, but only when I am convinced that they are capable of doubling in 12 to 18 months, and potentially much higher returns in the longer run, will they earn a buy recommendation.

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About Josh Levine

Levine has 25 years of senior-level experience in analyzing technology trends and investing in top-performing micro- and small-cap stocks. He excels at assessing management teams and evaluating new innovations and their impact on corporate valuations. More on Levine's bio: http://www.levinesmicrocapinvestor.com/aboutus/

To learn more about this and the other investment opportunities in the MicroCap Investor portfolio, subscribe:

http://www.levinesmicrocapinvestor.com/subscriptions/order/

Disclaimer/Disclosure: http://www.levinesmicrocapinvestor.com/disclosure/

Josh Levine owns shares of Elephant Talk Communications (ETAK).

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Source - Investorideas.com, MicroCap Investor