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Summary: ADAP (formerly California Microwave) is the leading U.S. supplier of telecommunications satellite earth stations and microwave radios used in wireless communications.
Quantitative
Evaluation:
Outlook (1 Lowest - 5 Highest)
1+
Fair Value
18.10
Risk
MEDIUM
Earn/Div Rank
B
Technical Evaluation:
BEARISH since 02/99
Rel. Strength Rank (1 Lowest -
99 Highest)
98
Insider Activity
Neutral
Business Profile 02-AUG-99
Adaptive Broadband said in July 1999 that in
keeping with its strategic plan, announced in
April 1998, it has shed non-strategic
businesses, building a financial base from
which to launch new market initiatives;
reorganized into one functional organization;
invested in new technologies, through
internal development and acquisitions,
necessary to address larger market
opportunities; strengthened and expanded the
life cycles of core product areas with product
upgrades and enhancements; and put in place
shareholder-friendly corporate governance
guidelines. Also in July 1999, ADAP signed a
contract, valued initially at $100 million over
five years, to sell AB-Access broadband
wireless service equipment to I3S, Inc. The
present corporate title was adopted in April
1999.
Operation Review 02-AUG-99
Revenues from continuing operations for FY
99 (Jun.; preliminary) declined 10%, year to
year, reflecting weakness in international
markets. The lower revenues, higher expenses,
and an $11.8 million nonrecurring charge for
purchased in-process research and
development, led to a widening of the
operating loss to $33.0 million, from $642,000.
After a 13% rise in interest charges (net) and
tax credits in both years, the loss from
continuing operations was $26.6 million ($1.79
a share, on 9% fewer shares), against $242,000
($0.01). Results are before income from
discontinued operations of $2.57 a share,
versus a loss of $0.46.
Stock information
Shareholders
13,500
Market cap. (B)
$0.389
Inst. holdings
58%
Business Summary 02-AUG-99
The strategy of Adaptive Broadband
(formerly California Microwave) is to build a
strong commercial business in high growth
international broadband access markets, and
also to continue to reinforce its strong
position in its core markets, which include
satellite modems, data telemetry and video
broadcast radios. The company has stated
that it plans to remain in only those markets
whose expected growth rates are at least 20%
per year.
ADAP is a leading U.S. supplier of satellite
earth station and microwave radio
infrastructure products, installed in more than
110 countries. In FY 98 (Jun.), the company
developed its current strategy and
reorganized its operations, selling its Satellite
Transmission Systems, Microwave Networks
and Services Divisions. ADAP also
outsourced some of its manufacturing work,
combined its two microwave radio divisions,
Microwave Radio Communications and
Microwave Data Systems, combined its two
government businesses, and decided to sell
these government operations. The
government division was sold to Northrop
Grumman Corp. for $93 million in cash, with
proceeds from the sale going to pay for recent
acquisitions. Operations as of the first quarter
of FY 99 included two divisions, Satellite
Communications, and Terrestrial Wireless.
In February 1998, ADAP sold its Satellite
Transmission Systems (STS) division to L-3
Communications Corp., for $27 million in cash.
The sale was part of a plan to focus resources
on maintaining and expanding the company's
leading market positions in satellite, terrestrial
data radio and other wireless product
businesses. In May 1998, ADAP sold its
Services division to Telscape International,
Inc., for $8.2 million in cash.
In August 1998, the company acquired
Adaptive Broadband Ltd., a company that is
developing technology that will enable
portable, low-cost wireless connections at
speeds matching wired network access, for
$11 million in cash. In November 1998, ADAP
purchased Crown Satellite, a supplier of
products and software for the network
delivery of internet protocol data and
multimedia services, for $7.5 million. The
company believes these key acquisitions
leverage its background in terrestrial and
satellite communications to offer multiple
solutions for data transport and internet
access needs.
In January 1999, ADAP stated that its
broadband strategy is the key to improving its
performance. In order to accelerate revenue
growth, the company stated that it is
investing more in sales and marketing,
targeted at domestic telecommunications
markets, introducing new product lines
obtained through recent acquisitions. It is
also focusing on research and development
on its selected high-growth, broadband
access infrastructure markets. Further, it is
implementing the next phase of its strategy by
fully consolidating operations. |
