iPASS, INC. -New Recommendation

iPASS, Inc. (NASDAQ–IPAS)
Valuation-$4.09
Closing price May 30, 2008-$2.15

We almost chose iPass over HPOL to recommend last week. We have been watching this one for a long time. Now at about 53% of our valuation and a number of catalysts occurring, we are ready to take the plunge again.

In March, Shamrock Activist Value Fund sent a letter to iPASS urging the sale of the company. Shamrock owns about 14% of iPASS. The stock was at about $2.80.

In mid-March, Foxhill Capital Partners, also sent a letter to iPass, urging the sale of the company. Foxhill owns about 3% of iPASS. The stock was at about $2.80.

On May 28, 2008, WC Capital Managements sent a letter to iPASS urging the sale of the company. WC owns over 4% of iPASS. The stock was at $2.11.

In between, iPASS announced Q1 earnings. $48 million in revenues (up about 2%) and a GAAP loss of $1.4 million or $.02 per share. Non-GAAP income was $1 million or $.02 per share. Cash was about $70 million with no debt.

iPASS seems to be successfully transitioning its business from dial-up services to wi-fi software and services, which were 76% of the latest quarters revenues, versus 57% last year.

Trading at 53% of our valuation, with $1.09 per share in cash and shareholders of over 20% of the company screaming for management to sell, this looks like a good time to buy. The 52 week low for iPASS was $1.98 and the high–$5.69.

iPASS trades over 270,000 shares a day, so liquidity is not an issue here.

There are about 64 million fully diluted shares outstanding.

About iPass Inc.

iPass helps enterprises unify the management of remote and mobile connectivity and devices. With iPass software and services, customers can create easy-to-use broadband solutions for their mobile workers, home offices and branch and retail locations, complete with device management, security validation and unified billing. iPass offerings are powered by its leading global virtual network, on-demand management platform, and award-winning client software. The iPass global virtual network unifies hundreds of wireless, broadband and dial-up providers in over 160 countries. Hundreds of Global 2000 companies rely on iPass services, including General Motors, Nokia, and Reuters. Founded in 1996, iPass is headquartered in Redwood Shores, Calif., with offices throughout North America, Europe and Asia.

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