What about UBS.
UBS To Join Wi-LAN At California OFDM Symposium
Sudden wireless favorite UBS will be attending the highly anticipated symposium on OFDM
planned by Wi-LAN for December 2. UBS' chart-tearing momentum may be sustained as it
hobnobs with industry leaders, and pursues valuable contracts. The company is in negotiations on
many fronts, says CFO Stephen Rosen, with "several irons in the fire." Even considering the stock's
astounding leap, he believes that UBS is "absolutely" undervalued at its current levels, and deserves
a market cap on par with Wi-LAN's.
Toronto, ONT, December 2/ SHfn/ -- For a month now, Unique Broadband Systems [V.UBS]
has been flying-charting exponential gains, trading on seven-figure volume and attracting more
media interest than its seen in ten years of business. In a matter of days, it went from a mere penny
stock to well above $3 at one point.
The momentum may continue as Canadian high-tech plays, especially those in wireless, feel the heat
of the limelight. Also, CEO Alex Dolgonos and CFO Stephen Rosen have been invited by
suddenly scorching Wi-LAN [T.WIN] to attend its symposium on OFDM on December 2 in
Santa Clara, Calif. With this great networking opportunity, and chance to discuss its MMDS
technology with industry high-flyers, UBS' day in the sun shows no signs of fading into the horizon.
In a previous interview with StockHouse at the height of the company's heavy trading volume,
Stephen Rosen said, "This company is not a short term thing, and I don't think the run is a
short-term run either." His words, so far, have proved prophetic.
"With companies like Cisco saying we want to use MMDS, 'forget video, we'll use it for
high-speed data, bi-directional Internet,' I have a feeling our partners at Lucent are going to wake
up to what we had talked about before, with regard to Internet."
At the time, he attributed the sudden momentum to the market waking up and noticing "the
technology UBS has in-house." While he believes that's still true, he also notes that UBS is
benefiting significantly from the love-in investors have been holding recently for wireless plays in
Canada.
Rosen cites a recent Cisco [CSCO] development that will see the network equipment manufacturer
enter the world of wireless leveraging MMDS technology, as proof that UBS is in the right place at
the right time. MMDS (multichannel multipoint distribution service) is a method of sending two-way
data signals over airwaves, and Cisco has developed a new technology, called VOFDM (vector
orthogonal frequency division multiplexing), that sends voice, data and video across a
low-frequency signal that doesn't require direct line of sight transmission. (Calgary-based Wi-LAN
has also been heating up the sector with its patented Wide-band OFDM technology to increase the
capacity and speed of wireless networks.) MMDS is a specialty of UBS, who has been selling
related equipment for at least five or six years, according to Rosen. "We're the only company that I
know of that has digital broadband outdoor MMDS equipment," he says. "We always knew that
MMDS opportunities were popping up but with a giant like Cisco jumping in and saying this is the
way they want to go?."
While UBS is known for its digital audio broadcast (DAB) technology, Rosen points out, it has
many other technologies and related products to offer. "I don't think the market realizes the extent
of the technology here yet," he muses. "It's just, unfortunately, when companies like a Cisco or a
Lucent or somebody that big in the industry, turns around and says, 'Hey, this is great,' that people
start looking around and saying, 'Who knows about this, who has this?'"
For years UBS has been developing the technology that the high-tech leaders are now embracing,
Rosen says. "Where we've poured money into our research and development programs over the
past five years, the giants don't have to. They wait to see a market emerge and then they go after
it."
UBS isn't yet in the MMDS for high-speed Internet space, though, that Cisco is pursuing. In
November 1998, UBS entered a collaborative development partnership with Lucent Digital Video,
a venture of Lucent Technologies, using MMDS to create digital video solutions. "I think in view of
where Cisco wants to go, it definitely opens up an opportunity for ideally us and Lucent to look at
competing technology," says Rosen. He explains that the basic premise for UBS' association with
Lucent is based on the finalization of a complete end-to-end digital MMDS solution, and Internet is
definitely a part of that. "With companies like Cisco saying we want to use MMDS, 'forget video,
we'll use it for high-speed data, bi-directional Internet,' I have a feeling our partners at Lucent are
going to wake up to what we had talked about before, with regard to Internet."
In Rosen's opinion this would be a natural progression for the alliance, although the two companies
are not in current discussions. Neither is UBS in contact with Cisco on the subject of MMDS,
although Rosen stresses the fact that UBS is not bound by any exclusive agreements. "Would we
talk to Cisco? Absolutely," he says. "The whole point of our being here is to increase shareholder
value. I'm not tied in to Lucent. They don't have equity in this company. So, if we could do business
with Cisco as well, I would love to."
The resurgence of MMDS, a retro technology hyped in the early '90s as "wireless cable", is gaining
UBS market attention, as evidenced by Wi-LAN's extended invitation. But it won't overshadow
UBS' digital audio broadcast operations any time soon. "The two technologies are so totally
different, the applications are so totally different," says Rosen. "Companies in Canada like CBC
and all the private broadcasters who are in radio, MMDS means nothing to them. Obviously, those
transitions from analog to digital are going forward--the CD Radios and XM Radios of the world
are moving forward, but you're talking two totally different services."
On the DAB side, UBS recently signed a teaming agreement with Hughes Network Systems to
develop, manufacture, market and sell products to the emerging digital radio market. By joining
with Hughes, UBS has the opportunity to bid on large contracts it wouldn't have the capacity to
undertake on its own. "We have great technology, but there's no way UBS can go in today and bid
on a $100 million, or $50 million, or $200 million contract that involves a rollout in multiple cities,"
Rosen says candidly. "We don't have the experience, we don't have the staffing. That's not where
we want to go-that will take us years to develop, and a lot of money. It would take away our focus
on what has got us here, our R&D strengths." One such high-profile contract that the team is
bidding on involves providing ground repeater stations for XM Satellite Radio's [XMSR] broadcast
network.
"We have two of our sales guys and engineers overseas right now in China looking at some
opportunities," he says. "There are numerous different markets that we can attack-there is DAB in
China, there's definitely a need for some of our cable TV products, our digital stuff, our QAM
modulators, things like that."
"Obviously, we're at the point where we're involved in negotiations on a specific application, a
specific contract, and hopefully, in the near term, both companies are going to come away with a
good contract," Rosen says carefully. But he refuses to comment on whether there will be any
contract news coming soon, or news on any portion of the company's business. "I can't answer
that. I don't know," he says. "We're always negotiating. We're not a one-product company. We're
not a one strategic partner company. So, we've got things out there on various fronts, lots of irons
in the fire. Who knows?"
One example of UBS' many initiatives underway, is its efforts to branch into China. "We have two
of our sales guys and engineers overseas right now in China looking at some opportunities," he
says. "There are numerous different markets that we can attack-there is DAB in China, there's
definitely a need for some of our cable TV products, our digital stuff, our QAM modulators, things
like that."
Based on its current operations and signed deals, does Rosen believe UBS' escalating valuation
(now around $175 million) is deserved? Rosen answers with the question, "Do you think a
company like Wi-LAN is worth $800 million?
"Wi-LAN is worth $800 million with trailing revenues of $4 million, and albeit a very strong patent.
Our trailing revenues are higher, our immediate future revenues will probably be higher," he argues.
"We have much more developed technology. If companies like Wi-LAN are trading like crazy, and
capped at such high value?I think it's just the furor of the whole wireless industry."
Does the CFO who believes his technology company will grow to be among the top five in the
world, believe UBS is undervalued at these levels? "I would think so, absolutely," he says
convincingly. "As far as valuation goes, on a comparative basis around North America and who's
doing what, I absolutely think we're undervalued." |
