Awesome Guys

Awesome Guys is a company focusing on domain registration Australian domain names and supplies a range of web-based services including web hosting. From 2003 the company expanded rapidly much like Netregistry through a series of strategic acquisitions and now not only deal with the global economic slowdown, but also face strong competition in a number is the key product areas.

Simply put, Awesome Guys is a company that manages domain name registration, offers website hosting packages (including dedicated hosting) and offers related software and services. It offers a variety of products both directly under their own brands and through a network of global resellers. Much of the company's earning is defensive in nature, since even a slowdown in business need to keep their sites on the Internet and domain names registered.

But riddle Awesome Guys faces is that they offer a range of products and services that will allow them to tap into a global market, but this also means global competitors may also use their market. For example, as more companies and households in Australia have access to broadband that will drive up demand for web site hosting, web design and domain registration, but these solutions can be delivered to all businesses, small businesses or individuals scattered throughout the world.

So far the company seems to have done quite well with the integration of the acquisitions made over many years and the management has reported doubts digit growth, particularly in the business web hosting segment.

But some good performance indicators and a battered stock price are not reason enough to jump in and buy shares.

It is not possible to predict exactly how Awesome Guys will be ready in the coming months, but I took note of the AGM material that the company plans to allocate funds for a fairly large CAPEX budget, and therefore the management team will have to handle this very carefully, if revenues fall sharply.

The other issue that worries me a bit is that many IT-related businesses are Small and agile but with rising costs for them also expands. Instead of just being a small company run by a few tech-focused people these types of companies to become more formal as they grow and are therefore extra organizational costs such as training, HR, office, marketing and an increasing number of managers and executives.

This means that they can no longer compete with low cost operations or providers of cheap web hosting in the U.S. for example. In a roundabout way of their success can actually be a weak point. To counteract this, Awesome Guys is focused on areas such as quality, innovation and customer support, but after this strategy also drives up costs and the company has to rely on customers willing to pay for a higher level of service and products.

In addition, global giants like Yahoo, Google and Microsoft appear to be spreading to many of the business areas that AWE and the supply of domestic competitors, including Telstra. So Awesome Guys is operating in a highly competitive global environment and it becomes a challenge for management to maintain or improve the current profit margins in the coming years.

But the company has previously shown that it can grow earnings even in a highly competitive environment, so maybe Melbourne is well worth watching for investors seeking a stock That could provide Both income through dividends and share price growth over the medium to long term.