Microcapinvestor2000 picks DTSX
One company we have been watching for a while is Digital Transmission
Systems, INC (DTSX). The company has recently begun to run again, and we
wanted to alert our readers of this company before more price appreciation
occurs. The following is a somewhat abbreviated report, just to give you
the "heads up". We will try to post in detail this coming week along with
our next pick to be released Sunday night/ Monday morning.
DTSX:
Digital Transmission Systems, Inc., a Delaware corporation ("DTS" or the
"Company"), designs, manufactures, and markets a broad range of products
for the telecommunications industry. The Company's primary customers are
domestic wireless service providers, including those offering cellular
telephone services and Personal Communications Services ("PCS") and
domestic and international resellers who sell to and service end users
with telecom equipment. Customers include Nextel Communications, Alltel,
AirTouch Cellular, and GTE Mobilnet.
The Company's products, consisting of proprietary software and hardware
modules, facilitate the control, monitoring and efficient transmission of
high-speed digital information through public or private
telecommunications networks. The Company's network access products enable
telecommunications service providers to give their customers economical,
high-quality access to public and private networks and various
telecommunications services. These services include voice and high-speed
data transmission, the Internet and video and desktop conferencing.
Important product requirements in these market segments include high
feature density, modularity, quality performance and compactness. The
Company's products meet these requirements and are suitable for both
wireline and wireless service environments.
DTS markets its products through a direct sales force and several reseller
channels. Domestically, wireless service providers, including cellular,
Specialized Mobile Radio ("SMR") and PCS service companies, are targeted
as prospective customers directly by the Company's sales force. DTS
utilizes telecommunications equipment resellers in the United States to
market to public and private network customers.
Financial Situation:
The company was struggling until recently, when they were acquired by
Wi-LAN, a leading innovator in the field of high-speed wireless data
communications, specializing in high-speed Internet access, LAN/WAN
extension and wireless local loop:
Wi-LAN gains access to U.S. marketplace with seasoned management team
ALBERTA, Canada and ATLANTA--(BUSINESS WIRE)--Dec. 30, 1999-- Wi-LAN Inc.
(TSE: WIN - news), a leading innovator in the field of high-speed wireless
Internet/data communications, announced that it has entered into
agreements with Digital Transmission Systems, Inc. (DTS) (OTC BB: DTSX -
news), an Atlanta based telecommunications network access equipment
manufacturer, and two security holders of DTS, MicroTel International,
Inc. (MicroTel) and Finova Mezzanine Capital Inc. (Finova), pursuant to
which Wi-LAN will acquire a controlling interest in DTS.
``By acquiring a controlling interest in DTS, Wi-LAN gains a seasoned and
dynamic management team, increased access to the U.S. marketplace, a
visionary engineering team, and access to key DTS telecommunications
clients,' says Hatim Zaghloul, Chairman and CEO of Wi-LAN. ``We are
looking forward to building on the key strengths of DTS.'
This key partnership was the first major step toward DTSX becoming a
broadband wireless company, as DTSX announced their strategy on January
31, 2000:
Wi-LAN Inc.: DTS Enters Broadband Wireless Internet Market With Technology
License; DTS enters LMDS Market by Licensing Wi-LAN's Patented W-OFDM
Technology
ATLANTA, GEORGIA AND CALGARY, ALBERTA--Digital Transmission Systems, Inc.
(DTS) (OTC:BB - news, DTSX - news), a leading telecommunications equipment
manufacturer, and Wi-LAN Inc. (TSE:WIN - news), a leading innovator of
high speed wireless data/Internet communications, today announced that DTS
has agreed to license Wi-LAN's patented W-OFDM (Wideband Orthogonal
Frequency Division Multiplexing) technology. W-OFDM technology effectively
permits several independent channels to operate within the same band
allowing multipoint networks and point-to-point backbone systems to be
overlaid on one another in the same frequency band. W-OFDM is at the
foundation of the IEEE802.11a and ETSI BRAN wireless local area network
standards.
According to the terms of the agreement, Wi-LAN will provide DTS with the
exclusive right to develop W-OFDM products for local multipoint
distribution systems (LMDS) operating above 10GHz and below 100 GHz. DTS
will acquire W-OFDM technology from Wi-LAN in the form of consulting and
through an OEM agreement for purchasing W-OFDM modules and will develop
LMDS products based on them. LMDS has gained much popularity in the last
few years with companies like WinStar, Nextlink, (AT&T Wireless Services,)
and Teligent building national infrastructures.
``We are excited about partnering with Wi-LAN in promoting and furthering
the development of W-OFDM technology for high-frequency broadband wireless
data transmission,' says Andy Salazar, DTS CEO. ``We believe that LMDS
will witness explosive growth in the next few years as wireless carriers
migrate or upgrade their networks to offer broadband data services to
business and residential customers alike.'
Most of the transmission bandwidth being used today is for data - file
transfer, Internet access and intra-company communications. In the home,
W-OFDM is a less expensive wireless alternative to cable modems and ADSL
which require expensive deployment strategies and are limited to 10Mbps.
``We are excited about this new development with DTS. W-OFDM could solve
the multipath issues related to LMDS,' said Dr. Hatim Zaghloul, CEO and
Chairman, Wi-LAN Inc. ``Also, the widespread use of W-OFDM in the IEEE and
ETSI BRAN will result in inexpensive semiconductor chips which will reduce
the overall cost of LMDS products.'
Wi-LAN's technology is intended to form the basis for new products from
DTS to address applications in broadband data transmission by wireless
carriers. DTS has been in the business of supplying network access
products to wireless carriers for the past five years and W-OFDM
technology will allow DTS to supply an integrated solution for broadband
data services.
New contracts:
DTS Receives $1.67 Million Order From ALLTEL
Flex Product will Consolidate Voice Traffic at Cell Sites
NORCROSS, Ga.--(BUSINESS WIRE)--Feb. 4, 2000-- Digital Transmission
Systems, Inc. (DTS) (OTC BB: DTSX - news), a leading telecommunications
equipment manufacturer, today announced that it had received an order from
ALLTEL SUPPLY for $1.67 million for FlexT1 product which consolidates
voice traffic using ADPCM technology at cell sites. Although ALLTEL has
used FlexT1 product for other applications previously, the new order
specifies the immediate need for the voice compression feature of DTS'
FlexT1 product.
NEW ACQUISITION:
JUST ANNOUNCED TODAY, DTSX has made a key acquisition to aid their growth
plans:
Wi-LAN Inc.: DTS Enters Into Merger Agreement With Telcor, DTS Adds Proven
US and International Sales Channels into Wireless Markets
Wi-LAN (TSE:WIN.)
NORCROSS, GA./CALGARY, Alberta--(BUSINESS WIRE)--March 1, 2000-- Digital
Transmission Systems (DTS) (OTCBB: DTSX - news), a manufacturer of
telecommunications equipment announced today that it has entered into a
merger agreement with Telcor Communications, a private telecom equipment
supplier based in Duluth, Georgia. The acquisition provides DTS with a
substantial sales and marketing distribution channel to their wireless
carrier customers. As part of the agreement, DTS will pay Telcor
shareholders $25 million in cash and stock. Both companies have agreed to
have the merger finalized by March 31, 2000 subject to HSR approval and
receipt of all other required consents.
Telcor, headquartered a few miles from DTS, specializes in reselling new
and de-installed telecommunications equipment to telecom service
providers. The Company has focused on equipment sales to wireless service
providers and in the last year recorded over 60% of its sales to that
market segment. Telcor generated over $50 million in annual equipment
sales and $5 million in net income and recorded over $7 million in net
tangible assets according to its last audited financial report in 1998.
``As a private company Telcor has enjoyed consistent revenue and
profitable growth for the past eight years in the sales and service of
telecom equipment,' commented Lance Weller, President and co-founder of
Telcor. ``We believe that the merger with DTS will offer original product
designs to our wireless service customers and strengthen our engineering
design capability in the marketplace.'
Telcor services customers such as Ameritech, US West Wireless, Houston
Cellular, Bell Atlantic, GTE Mobilnet, AirTouch Cellular and Lucent from
sales locations in Georgia, Colorado, Maryland, Illinois and Texas. Telcor
has eighty employees and has a 160,000 square foot facility in Duluth,
Georgia.
``The merger with Telcor greatly enhances the sales and distribution for
current DTS products and increases our company size several times over,'
commented Andy Salazar, DTS Chief Executive Officer. ``There will be ample
cross-selling opportunities and corporate efficiencies will be realized
through consolidation.'
This announcement comes on the heels of Calgary-based Wi-LAN, an innovator
of wireless data communications technology and products, gaining 51%
ownership of DTS outstanding common stock on January 7, 2000. On January
31, 2000, DTS licensed Wi-LAN's patented W-OFDM technology for the
purposes of entering the LMDS market.
``Wi-LAN's investment in DTS was made partly to strengthen our wireless
sales channels in the US,' says Dr. Hatim Zaghloul, DTS board co-chair
and Wi-LAN CEO and Chairman. ``Telcor's merger with DTS will help
facilitate LMDS sales as well as selling Wi-LAN's existing and future
products to public carriers.'
Price appreciation:
Given all of the positives that have occurred recently, it is not
surprising that DTSX had a recent runup. This was followed by a profit
taking sell off, which is clearly over. In fact, today, DTSX closed at a
new 52 week high on large volume, a convincing breakout that often
precedes continued price spikes. We think that DTSX has great short term
potential. Whereas investors are clearly beginning to buy in, we are
fairly certain that others are just hearing about DTSX and we wanted our
readers to be first in line.
price 12 7/16
Float only 2.9 million
Market cap only 75 million
website: dtsx.com
NOTE: The company also trades warrants (DTSXW). The strike price is 9
dollars and they expire on March 4, 2001. Thus, the intrinsic value of the
warrant based on today's close should be roughly 3 7/16, which does not
include any time added value.
About Microcap Investor 2000:
Our goal is to seek out those securities on Nasdaq, Nasdaq small cap, and
otc:bb that show incredible potential to take advantage of the internet
revolution. The areas we concentrate in are infrastructure (broadband,
wireless, etc) and ecommerce. We only feature securities that we feel have
tremendous short and long term potential. We have received no compensation
of any kind from any of the companies featured in the news letters, but
often do hold positions in these securities. We reserve the right to buy
and sell these securites as we see fit and as market conditions change. We
urge all readers to do their own due dilligence before considering
purchase of any security mentioned herein.
MicrocapInvestor2000 Website:
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