Written by: Zack Miller | October 16, 2007
Zack Miller
IsraelNewsletter.com
Tech Insider site, Unstrung, wrote yesterday that various sources are pointing to Cisco (CSCO) doing an imminent M&A in the WiMAX space and the most likely candidate is Navini Networks. Interesting factoid…
Unstrung’s analysis is based on a ThinkEquity analyst’s piece published on September 28th. In the piece, analyst Anton Wahlman posits two interesting pieces of info:
- Cisco is finally interested in getting serious about WiMAX.
- Navini wins the bake-off and not Alvarion (ALVR)
So, addressing point #1, ThinkEquity’s thesis is that WiFi, something Cisco knows A LOT about with its Linksys acquisition, and WiMAX go together, much like enterprise and public networks (muni and cellular) are all blending together. Cisco, of course, realizes this and its next move would have to be a seminal acquisition of a WiMAX public networks company. Here’s a link to more about CSCO’s WiMAX ambitions.
Point #2 requires some analysis. Why would Cisco choose to go with Navini? Well, a couple of reasons. Navini has “beamforming technology” . See Wikipedia on beamforming here. ThinkEquity believes this is critical for best performance. Navini also has deployed with AT&T (T) in several good markets (FL, LA, and GA). Lastly, Navini has made good progress on the 802.16e standard. So, in essence, ThinkEquity believes that beamforming makes MIMO technology really useful.
If Cisco were to purchase Navini, it would mean bypassing Alvarion. Clearly, the WiMAX opportunity is huge. There are probably 1000 operators who will spend $10M to over $100M each rolling out WiMAX in the next two to four years. ThinkEquity believes this market opportunity is $10B-$100B+.
If Alvarion plays its cards right, building off its best-in-class execution of a WiMAX centric plan with the world’s system-level equipment suppliers, some analysis points to the fact that they could capture 5% or more of market share in this space. Backing that out, that could mean anywhere from $500M - $5B in revenues. Alvarion currently sports a market cap under $800M with a net-cash position of almost $2/share.
Alvarion has the largest installed based of fixed WiMAX deployments (170 out of 350 worldwide) and is the only vendor currently shipping mobile WiMAX ready base stations. Mobile WiMAX itself is purported to grow from 0 today to $5B in 5 years. There are a lot of opportunities for ALVR on the horizon, both near and far.
Clearly, Alvarion is a key thematic investment in the entire WiMax roll-out and if ThinkEquity is right (i.e., WIFI and WiMAX will deploy in blended format), ALVR will leverage its exposure to FMC (fixed-mobile convergence) as cell phone companies make headway in the inefficient wireless telephony architectures for a majority of all calls made/received.
CSCO seems to be making a technology bet if they scoop up Navini — a move that will give them a strong, but not dominating, presence in WiMAX. I’d rather put my chips on ALVR and its business and financial operating history, complete with cash on the books and no debt. Regardless, if CSCO does decide to move forward into WiMax with an M&A of Navini, it provides a huge seal of approbation for WiMAX and means a huge player, previously lukewarm to the idea, is getting serious about it.
ALVR should benefit regardless of the outcome.
Disclosure: Author’s fund has a position in ALVR as of 10/15/07.
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Zack Miller is the lead equity analyst for America Israel Investment Associates, LLC. and a former equity analyst for a leading multinational hedge fund. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email zack@profile-financial.com
Written by: Aaron Katsman | October 15, 2007
Aaron Katsman
www.IsraelNewsletter.com
Orckit Communications (ORCT), a leading provider of advanced telecom equipment targeting high capacity broadband services, is moving up over 9% during trading today on the hope of an announcement of a new client. Since Orckit was named as one of IsraelNewsletter Labor Day specials, the stock has soared more than 30%. Today’s rumors that Global Crossing(GLBC) is going to announce a deal with Orckit in the next few weeks, has helped investors regain some confidence in management. Management has been saying for months that they are about to sign a new customer, only to continue to delay their announcement. Just a reminder, right now Orckit has just one customer, KDDI, not exactly the way to grow a big business.
For all you traders out there, the stock has done very well during the 4th quarter over the last 3 years, and I would expect the positive momentum experienced over the last month and a half to continue.
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Disclosure: Author has a position in ORCT as of 10/15/07. Author has no holdings in any other stock mentioned.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Aaron Katsman | October 12, 2007
By Aaron Katsman
IsraelNewsletter.com
Tefron,(TFR), a textile company that manufactures boutique-quality everyday seamless intimate apparel, active wear and swimwear sold throughout the world by such name-brand marketers as Victoria’s Secret, Nike (NKE), Target (TGT), and The Gap (GPS), has seen its’ stock fly over the last week surging over 18%. The surge is coming on no news, but it would make sense that simply the heavy selling of late was way overdone, and a bit of rationality has taken over. Or could it be that Iranian President Ahmadinejad, actually paid attention to our blog and started buying up Tefron stock.
As I mentioned previously CEO Yos Shiran was optimistic for Q4 and all of ‘08, and thought that the worst was behind the company. I would expect to see continued upside in Tefron stock.
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Disclosure: Author’s fund is long TFR as of 10/11/07. Author has no positions in any other companies mentioned.
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
Written by: Aaron Katsman | October 11, 2007
By Aaron Katsman
IsraelNewsletter.com
A report issued by the Israeli Ministry of Finance yesterday went without much fanfare but confirms the health of the Israeli economy, and that the economic reforms put in place by former PM Bibi Netanyahu are working. The report stated that for the month of September, there was a budget surplus of 500 million NIS (about $125million). Most of this surplus came from increased tax receipts. Keep in mind that Netanyahu’s reform centered on cutting taxes, cutting government spending, privatization and increasing economic growth in the private sector — supply-side economics in a nutshell. While all the naysayers continue to reject the evidence that the way to true economic growth is through this formula, the proof is in the pudding.
Once again we see that the government increased revenues while lowering taxes, through increased growth, and as a result more taxes actually being paid.
To the credit of current PM Ehud Olmert, he has left things alone, not screwing anything up (economically that is); no easy feat for a politician. He has even encouraged the continued privatization of government and quasi-government monopolies. Take for example Aliya (immigration to Israel). A recent government decision empowers private organizations like Nefesh B’Nefesh to take the lead in offering services to North Americans looking to move to Israel. This private organization has been more successful in the last 5 years than the quasi-governmental agency has been in the last 25. This is but a small example of how the private sector can get things done in a better and more efficient matter.
The next question is what should be done with the budget surplus? That’s for another post but in short…….. CUT TAXES!!!!!!!!!
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Aaron Katsman is the lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.
