Salomon also has high hopes for interWAVE Communications (NASDAQ:
IWAV - Quotes, News, Boards), which makes "a complete GSM system
in an enclosure the size of a PC tower," according to the analysts.
Designed for smaller geographic areas, interWAVE's "Network in a Box"
can perform the same tasks as a massive, multi-million dollar system
consisting of a base station controller, switch, and several base
stations-just on a smaller scale. The key is that the company's networks are
relatively inexpensive and capable of supporting the upgrade from GSM to
3G.
interWAVE has strategic relationships with Nortel (NYSE: NT - Quotes,
News, Boards) , which resells its products under the name PicoNode;
Alcatel, which employs the product in its corporate customers; and
Hutchinson Technology (NASDAQ: HTCH - Quotes, News, Boards)
which employs interWAVE's product in its rural GSM markets.
The company's 1999 sales were $21 million, and Salomon estimates
revenue will jump to $47.8 million this year, and $101.8 million in 2001. It's
estimated that the company will lose $0.40 per share this year, but by next
year, it's expected to generate a profit of $0.10 per share. Salomon notes
that risks include the company's relatively small customer base: Nortel and
Alcatel account for half of sales. But both firms have minimum purchase
commitments, as well as equity positions, suggesting a strong level of
commitment to its products. |
