CREE's RF devices - who are their customers?
I want to share with the thread a recent MSDW investment recommendation on a company called Powerwave Technologies, which specializes in hardware for wireless telephone transmission. I think it doesn't take much imagination to extrapolate that CREE will benefit tremendously in the near future as the infastructure buildout for 3G wireless telephones accelerates in earnest... Sorry for the typos, if any:
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Powerwave Technologies (PWAV, $44.75, $65, Strong Buy)
US: Technology: Telecom Equipment - Wireless
Arindam Basu (415) 576-2329
Pace of Growth, Already Strong, Should Pick Up
- we believe that PWAV has opportunities to make the most of its dominance in the marketplace
- Nortel said earlier this week that it intends to try to move into the No.2 position in the wireless infrastructure space, behing Ericsson
-Powerwave gets about 45% of its revenue from sales into Nortel-based wireless networks
-Nortel is focusing on 3G networks to drive its targeted gain in marketshare, and we believe that it is aiming at achieving a 25% share of 3G buildouts. We expect PWAV to ship significant volumes of 3G power amplifiers, beginning in 1Q01. It is already shipping prodction volumes now.
-NT could focus on 3G networks in established markets to avoid financing issues with its carrier customers, in our view. So far, it has signed high-profile 3G deals totaling approximately $1.8B
-The ratio of PWAV's P/E to growth rate, or PEG, is 1, and the stock is trading on par with its peers. We expect growth in the company's business to outpace its rivals by far.
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From what I can gather, the "peers" of PWAV include:
Anaren Microwave (ANEN)
Both PWAV and ANEN have had nice, steady, growth in revenue and earnings (30% to 100%+)during the past two years. Incredibly, PWAV's stock price has been largely immune to the market's downturn since Labor Day. It's actually in positive territory !
Other companies involved in wireless infrastructure buildout include:
Ceragon Network (CRNT)
DMC Stratex Networks (STXN)
Harris Corp (HRS)
I'd appreciate it if anyone on this thread can elaborate more on the dynamics + strategies of the wireless infrastructure buildout, and CREE's role in it. FWIW, I've been adding to my positions in CREE during this latest downturn, and have bought more positions at $58-1/2 and $59-1/2 today.
I believe that Greenberg's recent article making analogies between CREE and Lernout & Hauspie has given us a tremendous opportunity for longer term investors like myself to average down our cost basis. |
