Jacada Ltd. (NASDAQ: JCDA, Stock Forum)
Industry: Business support services
Price as of September 30 – $3.70
Long-term Target – $6.65 to $7.40 

One month ago, we profiled JCDA to subscribers of Peter Leeds Penny Stocks. Since then, the price has remained relatively flat, which might not pique your interest at first glance. 

However, given the dramatic downdraft in prices in both the overall and penny stock markets in the last four weeks, which was capped off by a big 8% one-day drop, JCDA's shares are resilient.

When a stock price remains unchanged while the markets drop, that can be considered a gain. In fact, history has proven that the stocks that hold up best in down markets are out-performers once we return to a bull market.

Taking Jacada's price strength, coupled with their debt-free, $26 million in cash, rock-solid financials, as well as their recent contract wins and upbeat guidance, we think JCDA might be getting ready to run.

We got in touch with Jacada to give us their take on the industry, their competition, and what sets them apart. Here are their answers. 

1.  Competitive landscape (Who else is going for the same customers, and where does your company fit in?) 

The competition is primarily coming from internal IT departments who believe they can replicate Jacada’s offering.  There is an offering by Microsoft (NASDAQ: MSFT, Stock Forum) called CCF, which is sold through distribution, and there is also the potential for the large CRM companies to promise they can provide as well, such as Siebel.  The problem with those is that nobody (except MSFT) has a product that was specifically designed for the call center.  The company’s founder and former-CEO, Gidddy Hollander actually went to work in a call center to see how the solution could conceivably play out in the market.  Jacada beats the MSFT offering in most instances.  Other players in the call center space, peripherally, include Aspect Communications, Kana (OTC:BB: KANA, Stock Forum), Nice/Witness Systems (NASDAQ: NICE, Stock Forum), RightNow Tech (NASDAQ: RNOW, Stock Forum), Avaya, Genesys, and InterActive Intelligence (NASDAQ: ININ, Stock Forum).      

2.  Competitive advantages (What factors give you a leg up on your competition?)

Already out in the market selling a specifically designed product for call centers to call centers, and already entrenched in large integrators’ offerings (via partnerships with IBM (NYSE: IBM, Stock Forum), Accenture (NYSE: ACN, Stock Forum), and Avaya); well funded—with $50 million in cash, it’s easy for customers and partners to see they are not going bankrupt. 

3.  Barriers to entry (What makes it difficult for new competition to emerge in your space?)

Technology development and head start by Jacada. 

4.  Threats to success (What are the issues you are most concerned with, and how are you addressing them?)

Complete drop-off in global IT Spending; keeping expenses in line. 

5.  Industry outlook (What are the expectations for your industry over the next five years?)

The call center business is growing nicely, as enterprises are using customer service to keep their customers and in certain industries, like utility, also keep regulators amenable to price increases. 

6.  Company outlook (What do you expect your company to look like five years from now?)

Likely that the company is bought by a larger entity that wants a growth engine. Management estimates that we’re far from a mature market.