Equipment supplier NetComm Wireless (NTC) jumped on high volume today on news that it has signed a distribution agreement that will see it gain a foothold in the United States market.
However, strategic deals such as today’s agreement with major US distributor SYNNEX Corporation is unlikely to be enough to see NetComm’s stock break out of its trading range of 22.5 cents to 26.5 cents that have capped the stock since mid-August.
The problem is shareholders have heard the story before. It is noteworthy that a small $30 million market cap company like NetComm can strike deals with global information technology & telecommunications players, but these deals have done little to transform the market minnow – at least not yet.
NetComm is hoping that its repositioning into the wireless machine-to-machine (M2M) space will make it a true global technology player and the agreement with SYNNEX is an important step to that goal as it will enable NetComm to sell its M2M devices through the Verizon mobile sales channel.
M2M devices allow various equipment to communicate and are key to products like smart power meters and contactless payment systems.
The stock jumped one and a half cents, or 6.3%, to 25.5 cents with over 1.5 million shares trading hands. This is close to seven times its 30-day average volume.
NetComm will need to show shareholders that it is monetising these deals if the stock is to break materially higher.
NetComm is part of the Uncapped 100 and the stock is up 59% this calendar year.