Oscar Gruss: The company’s slide has bottomed out

ECtel Ltd. (Nasdaq: ECTX) last night published its financial report for the second quarter of 2007. The company narrowed its losses as revenue increased from the preceding quarter, but the numbers are still well below the preceding quarter of last year.

The company posted $5 million revenue, up 40% on the $3.6 million posted for the preceding quarter, but still almost 25% less than the $7.2 million posted for the corresponding quarter of 2006. The company narrowed its non-GAAP loss by 43% to $1.8 million ($0.11 per share) from the $3.1 million lost ($0.19 per share) in the preceding quarter, and compared with a non-GAAP profit of $600,000 ($0.03 per share) for the corresponding quarter. The company did not disclose its net loss for the quarter.

ECtel president and CEO Itzik Weinstein said that the company’s orders had increased, which, combined with other measures to improve sales and expand the company’s presence in its main strategic markets, “will serve as the foundation for improved future performance, with a view of returning to previous performance levels in coming quarters." 

Oscar Gruss reiterated its “Buy” recommendation for ECtel with a target price of $4. The investment bank says, “ECtel reported a solid June quarter with nice sequential revenue growth, tight expenses and improved margins. Management indicated better booking momentum and guided for sequential growth in the September quarter and the second half of 2007. Following a slowdown in orders from an important European account and weaker execution from a distributor in Eastern Europe, ECtel experienced significant reduction in the first quarter revenue with increased losses. Recent results and future indications lead us to believe that ECtel’s business has bottomed and the company is on the growth path again.”