Wi-LAN Inc. (T.WIN) Message Board

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Technology Stocks : Wi-LAN Inc. (T.WIN)

WILN 1.390

0.0%

Sep 18 5:00 PM EST

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To: Uptickin who wrote (355)	7/6/1999 10:41:00 PM
From: Hatim Zaghloul	Read Replies (1) of 16863

Paul Bradley with Canaccord Capital wrote the following Wi-LAN Inc. (WIN : ASE : $7.00) Paul Bradley (416) 869-7920 12-month target price: $10.00 (some report showed $6.50 by mistake) 52-week price range: $7.75-1.18 Shares outstanding: basic 18.3M Mkt. cap. / sales: 23.3X Debt: $18.6M Net margin (f00E): 6.0% Sales/Employee $91,600 Weekly trading volume: 442,140 Market capitalization: $128.1M Wi-LAN Inc. is a Calgary-based developer and manufacturer of high-speed wireless communications hardware. The Company has developed patented technology, known as Orthogonal Frequency Division Multiplexing (OFDM), that significantly boosts the speed at which data can be sent over wireless links. Relative Speed of Different Connections (table not available in email version) OFDM technology provides a solution to the growing demand for high bandwidth that is being driven by Internet access and multi-media applications. The IEEE, which sets the principal technical standards for communications technology, has incorporated Wi-LAN's patented OFDM technology as part of its standard (802.11a) for high-speed wireless data transmission. The standard will come into effect in November and organizations wanting to build systems based on 802.11a will have to pay a royalty to Wi-LAN. The Company launched its first product iWill - Internet Wireless Local Loop) based on OFDM in June 1999. The iWill product can provide access at up to 30Mbps over a wireless link. The table shows the relative speed of different connections. The Company also has a range of products based on earlier Spread Spectrum technology that can be used to link remote locations at speeds of up to 4.5Mbps. Networks based on these products have been rolled out in Northern Alberta and are being put into service in the UK and Sweden. The UK and Sweden contracts are worth about $100M over the next 3-5 years. Data transmission networks are generally made up of a variety of wireline and wireless components. Cost is the key determinant of which approach gets used. Wi-LAN's OFDM technology offers a very cost-effective approach to providing connectivity in situations in which optical fibre or copper wire would be prohibitively expensive. Initial applications might be sites at the edges of established telecommunications networks (suburban office developments) that do not have high-speed access or under-developed regions in which wireless applications can be implemented more rapidly and cost-effectively than fibre optic cabling. Industry statistics suggest that wireless data applications are growing rapidly and the market could be worth as much as US$50B by 2002. Wi-LAN's products address a specific sector of the market worth perhaps US$1.5B-US$2.0B. The Company will reach this market through a combination of licensing and manufacturing. The start of formal discussions with two potential licensees began in late May. A third company entered discussions in June 1999. Licensees are likely to be semiconductor companies, who will build the high-speed chips needed to process OFDM signals and telecommunications equipment manufacturers seeking to broaden their product offerings. In f2000 we estimate that the combination of licensing and manufacturing agreements could be worth $25.0M of total revenue of as much as $50.0M. We also anticipate that Wi-LAN will position its business to deal with a small number of key semiconductor and telecommunications equipment manufacturing companies on a non-exclusive basis over the next three years. We estimate revenues for f2001 could be as high as $100.0M. Wi-LAN is at an early stage in its corporate development and its market value reflects the promise of its technology. The stock is trading at almost 24X 12-month trailing revenues and just over 10X anticipated revenues for f1999 of $12.5M. Material revenues from the OFDM technology will commence in f2000 (starting November 1999) and we anticipate that revenues could reach $50.0M during f2000. At current prices the stock is trading at a modest 2.5X anticipated f2000 revenues. Given the opportunity for revenue growth, without the need for massive capital expenditure or infrastructure development, the stock could trade between 2.0X-4.0X our estimate for f2001 revenues, or about $10.00. We anticipate that Wi-LAN will list on the TSE in the near future.

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