Here's a piece from Saturday's Globe & Mail (Toronto) that contains some discussion on Glenayre (near the end of the article).
John
Is this the right time to buy RIM?
by Mathew Ingram - Saturday, April 15, 2000
Let's assume you didn't jump off a bridge this week during Nasdaq's roller-coaster ride, and you still feel that the technology sector is one of the places you want to be long term -- especially now that it is a lot less wildly overvalued.
There are a number of different areas that are likely to show considerable growth in the near future, regardless of what the stock market does, and one of those areas is wireless products. If you decide to get involved in this particular sector, one of the questions you will have to answer sooner or later is: should I buy Research In Motion?
That question may be a little easier to answer now than it was a month or so ago, when Waterloo, Ont.-based RIM's stock was at $220 -- giving the company a market value approaching $15-billion, just behind Canadian Imperial Bank of Commerce. The shares peaked at $260.
Since then, of course, RIM and virtually every other tech stock has been decapitated by nervous investors, and the company's shares closed on Thursday at $62.40, giving it a market value of about $4.3-billion. The stock has lost more than 67 per cent of its value in a month, collapsing by more than 45 per cent on Wednesday alone.
RIM has lost those billions in theoretical market value despite having made a number of important announcements recently, including some licensing agreements and the launch on Tuesday of a new handheld wireless device similar to the popular Palm Pilot, code-named the Proton.
Despite these developments, however, the market seems to have come to the conclusion that RIM is not yet a category-killer, but just one entrant in a race that is becoming increasingly crowded. It may be one of the wireless stocks you want to own, but not the only one.
The company's supporters argue that the Blackberry pager is the leading wireless data device, and the Proton is a "Palm killer," and therefore RIM still deserves to trade at a substantial premium, compared with some other wireless stocks. But it's not clear that RIM has that big an advantage, or that what it offers can't be easily replicated.
Cellular phones, for example, are becoming more of a factor for wireless data as digital networks become more available in the United States and Canada, along with phones that can access e-mail and the Internet through special phone-enabled Web browsers. Entering text on a phone pad may not be that easy, but it isn't that much fun on a tiny RIM keyboard either.
As for the new Proton, it's easier to see it as a success if you define success as beating the Palm Pilot. Like RIM's Blackberry pager, the Proton's biggest feature is that it is always on, meaning you can get your e-mail from any Microsoft Outlook or Internet service automatically if you're in an area covered by a digital wireless service.
You can get your e-mail with the latest version of the Palm Pilot too, but you have to dial into a special server, and the device only comes configured to use Palm's e-mail service. You can use third-party software to get your regular e-mail, but you still have to pay Palm's monthly charges (RIM's products also include a monthly fee).
Even Palm supporters see the need to dial up in order to get e-mail as a drawback, but they don't need to give up the Palm to get what they want: they can get a cheaper and more flexible device called the Visor, from a company called Handspring. Started by the designers who originally developed the Palm Pilot, the company recently filed to go public.
The Visor uses the Palm operating system, which means that all the add-on programs designed for the Palm can be used (the Proton uses its own proprietary system). But the most important feature is an "expansion slot" into which different modules can be plugged, such as a wireless modem, a GPS module, a unit for playing MP3 music files, and so on.
One recently announced add-on is a two-way wireless modem from a North Carolina-based company called Glenayre Technologies -- a spinoff from a former Canadian company of the same name. Glenayre makes a two-way pager similar to RIM's, and the company has grafted that on the Handspring, allowing a user to access corporate or Internet e-mail and other services with software from Burnaby, B.C.-based Infowave Wireless.
The base model of Handspring's Visor sells for about $149 (U.S.), or $280 with an add-on modem, while RIM's Proton is expected to sell for about $500. In order to get access to wireless e-mail, users have to pay monthly wireless service charges of about $40 for both devices. In the United States, users can use data networks such as Mobitex, which is also offered by Rogers AT&T in Canada, or newer services such as Ricochet from Metricom.
Glenayre is listed on the Nasdaq Stock Market and Infowave is listed on the Canadian Venture Exchange. Glenayre's stock has come down to about $11 (U.S.) from $30 a few weeks ago, and Infowave's has fallen to about $23 from a high of $70. Despite the decline by RIM, it still trades at about 285 times share earnings and 34 times sales, and the company still has a market value of more than $4-billion.
Readers can reach Mathew Ingram by fax at (403) 244-9809 or by e-mail at
mingram@globeandmail.ca |
