Ambient: Little Company, Huge Idea, and a Stock that's Starting to Move
We've been following Ambient Corp. (OTC: ABTG) for a few months in our online 21st Century Alert "Update." It's a little company with a red-hot product and a huge partner. With the backing of utility mammoth Con Edison, Ambient has successfully moved large amounts of data, voice, and high-quality video across existing power lines and transformers at very high speeds, without noise, and above all cost-effectively — something many others have tried unsuccessfully to do for years.
We don't recklessly throw around expressions like "Holy Grail," but this stock comes close. With powerline communications, or PLC, every electrical outlet in your house becomes a way to access broadband, a cheap and easy alternative to using cable or phone lines for broadband access. Power lines reach practically every building in the United States, an estimated 125 million customers. PLC could be a massive shot in the arm for utilities as well as for Ambient. It could even revitalize the computer hardware and software industries. And it could really clean up in countries like China and India, where phone land lines are still relatively few but power lines are everywhere.
You can't buy a pack of gum for what the stock is trading at: 15 cents a share at press time. Don't laugh — it was at a dime in January and got even lower before starting a sudden ascent last month.
Ambient has had several successful tests of its PLC technology in the U.S. and a few weeks ago announced that Compania Americana de Multiservicios Ltda. (CAM), a subsidiary of the Chilean electric utility Enersis, with some 10 million customers, will conduct an evaluation of Ambient's technology; it's Ambient's first international licensing agreement. The evaluation will last throughout 2003 and the deal will generate fee income for Ambient in this quarter.
CAM is already operating a successful PLC trial in Santiago, in which 98% of customers have given Internet access quality a rating of "good or excellent," and where the evaluation and data transmission rate has reached symmetric up/down 10 Mbps to the final customers. From this trial and other "mini-rollouts" that Ambient has conducted, it's clear that its PLC technology is commercially viable. The final decision to start the large-scale commercial rollout of PLC in Santiago this year is expected soon.
When Ambient's PLC technology is commercialized...well, words fail us. This tiny under-followed company is on track to be one of the biggest success stories of the decade. Millions of people are going to have cheap, simple broadband access overnight. Millions may upgrade their computers or even better for the economy, buy a computer for the first time. Besides, where else can you buy a thousand shares of something this exciting for 150 bucks? We can't recommend piling on the shares at this point, since PLC still isn't out of the woods. But we can recommend putting away a few hundred dollars' worth and letting it ride, unless you really want to bother setting an exit price of 13 cents. After all, once in a while the stock market should be fun.
21stcenturyinvestor.com |
