Rob, all your questions can get us to do some soul searching and the quality of this investment. Actually, NTRO at this price might be fairly valued. It's certainly no screaming buy, especially if you apply very basic value investing principals.
Netro has over 50 customers to date. They say these customers will typically spend between 8 and 9 figures on equipment. The issues of how Netro will support the ramp to meet this demand are valid. I believe if you research the thread, you'll find that they've engaged 2 large contact manufacturers to compliment their own ability. They've also addressed the need to make standardized housings, etc to reduce costs. Yes, this will be a determining factor in their success to convert opportunity into profits.
Of the companies looking to operate services, this is only a small fraction of the companies that will be operating in the future. Only now are many important countries offering up the chance to buy spectrum. Here in Australia, they plan the first auction in the next 6 months. UK is raising billions selling spectrum. There are many different frequency ranges as well that will evetually be portioned out and Netro has equipment for most of them, and very strong strategic partners to support sales.
I guess almost all the sales Netro has made to date have been evaluation systems. I believe last quarter they said the first 4 customers have started to deploy systems and offer service. They expect it takes about a year to get to roll out stage and a lot of these customers are nearing that point.
There are many good articles, press releases and anaylyst reports on this thread. I suggest you go back at least 6 months and start reading. It's not simple to answer your questions.
Finally, it also gets back to your concern about valuation. We've just seen a great frenzy of buying on speculation that companies would eventually become giants in their respective industry, only to see that market collapse. Maybe it will come back to some extent, but who knows. I believe equipment players are normally valued higher. If a Lucent can't work with a vital supplier like Netro, they loose great advantage with their customer base. In the end, you must assign your own level of risk and then make your investment accordingly.
Good Luck,
Mark |
