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.