FSVK Report
courtesy of Agora
Fourth quarter release today. After the market close today, WaveRider will be hosting a Web cast conference call to discuss its fourth quarter results. On January 10, WaveRier pre-released its fourth quarter revenue of $1.5 million, significantly below our $2.9 million forecast despite the recent ADE acquisition that was not included in our estimate. At that time, we suspended our estimates, awaiting new guidance from the company given the increasingly problematic telecom environment. In aition to the release today, we expect to receive more definitive guidance on the company's expected performance for the duration of the year. Although we expect that the new guidance could be below our previous forecast (which included FY01 revenues of approximately $44 million), we think that management most likely will discuss the conservative view of the company's ultimate potential for the current year. The call can be viewed via either of the following Web sites: www.waverider.com or www.e-newsservices.com. We expect to publish revised projections shortly, but might need more time to review tempered expectations from management. Despite the company's moerated projections and potential growth, we would caution investors on two accounts: 1) funding for new service providers in North America that would use WaveRier's products remains difficult; and 2) WaveRider is introducing new products into a developing market that remains ambiguous given recent gyrations, and WaveRider's financial results as well as those of many other point-to-multipoint equipment suppliers reflect this.
LMS3000 receives FCC approval. What we expect to become WaveRider's flagship product, the LMS3000, just won FCC approval for deployment. The LMS3000 uses the unlicensed ISM 900 MHz frequency band, which allows service providers to offer easily installed, inexpensive, faster- than-DSL-speed Internet connections targeting the residential market. Because the 900 MHz frequency band does not require a line-of-sight path between transmitter and receiver, a service provider's customer could self-install its own (subscriber or CPE) antenna, mitigating a ''truck roll'' (the high number of truck rolls are a significant reason for the high expense of offering wireline DSL service in the consumer market). Specifically, the 900 MHz signal has propagation characteristics that obviate such RF impeiments as trees, buildings, and to some degree hillsides. Although demand remains difficult to ascertain, we think that the LMS3000 has incredible potential. We have not seen any competition offering the point-to-multipoint wireless Internet connectivity in the 900 MHz frequency band that WaveRider does. Other technologies (such as OFDM) that mollify line-of-sight issues are surfacing, but we expect that it could be some time before overall costs fall in line with the price points that permit a viable business case in the consumer DSL market.
Recent China order. Late yesterday, WaveRider announced that it is selling its wireless bridge in China. Although the order size is not significant, the relationship with the value-added retailer (VAR) in China is important as it could lead to much larger business in the future. We note that many wireless equipment companies are finding huge demand for their products in ''infrastructurally poor'' China, and we think that WaveRider's LMS2000 and LMS3000 point-to- multipoint products as well as its point-to-point wireless bridge (NCL1155) address a significant market opportunity that is extremely difficult to quantify at this juncture.
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