SAN FRANCISCO, Feb. 2 /PRNewswire-FirstCall/ -- Merriman Curhan
Ford (NASDAQ:MERR) today announced that it has initiated coverage
on the Communications: Wireless Technology sector under equity
research analyst Scott Searle, CFA. (Logo:
http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO) Searle's
research thesis includes company coverage of Alvarion Ltd. (ALVR),
Aviat Networks, Inc. (AVNW), Brightpoint Inc. (CELL), Cogo Group,
Inc. (COGO), RF Micro Devices, Inc. (RFMD), Smith Micro Software,
Inc. (SMSI) and TriQuint Semiconductor, Inc. (TQNT) with Buy
ratings and Palm, Inc. (PALM), Ceragon Networks, Ltd. (CRNT),
DragonWave Inc. (DRWI) and PowerWave Technologies Inc. (PWAV) with
Neutral ratings. Searle highlighted these themes in his company
initiation reports: -- Alvarion Ltd. (NASDAQ:ALVR $4.06; Buy)
Historically overhyped and often confused as a 4G competitor to
LTE, WiMAX is a real and commercially ready broadband wireless
solution that supports speeds of up to 40Mbps (going to 300Mbps).
Despite the global credit freeze and ensuing recession, WiMAX has
over 500 deployments in 147 countries. Alvarion is the leading
independent supplier (with 20% market share) of this largely
rationalizing multibillion dollar market opportunity. Although
near-term visibility remains cloudy, we believe this is currently
reflected in the stock. With $2.00 per share in net cash and EPS
potential of $0.30- 0.40 in CY11 we believe investors will revisit
the shares driven by 1) a thawing of credit markets, 2) successful
licensing in key markets (i.e. India), 3) U.S. broadband stimulus
funds and 4) the emergence of new verticals. We are initiating
coverage at Buy and see upside to $7-8, or 18x 2011 EPS plus net
cash per share. -- Aviat Networks, Inc. (NASDAQ:AVNW $7.19; Buy)
Although Aviat Networks has underperformed market indexes and its
direct backhaul comps, the company remains extremely well
positioned to benefit from exploding growth in mobile data traffic.
Simply stated, the transition to 3G/4G and the adoption of smart
phones is choking networks. Mobile backhaul is an immediate and
sustained beneficiary of this trend. Customer specific issues have
largely subsided and we believe customer activity is increasing. In
our opinion, we believe the company has the right products, product
roadmap, scale and complete end to end solution to achieve success.
We believe that despite the cloudy visibility that the
underperformance of shares will soon reverse and see upside to the
$10-12 level as the valuation gap narrows with its competitors. --
Brightpoint Inc. (NASDAQ:CELL $5.84; Buy) Brightpoint is the
leading supplier of distribution and logistics services to handsets
and other wireless devices with global and North American market
share at approximately 7% and over 30%, respectively. Thus
Brightpoint is a broad based means to participate in the recovery
of global handset sales in 2010 (10% vs. 7-8% decline in 2009).
More importantly, Brightpoint is an OEM agnostic way to participate
in the Smart Phone market which is expected to grow over 30% in
2010 and beyond. In addition to higher ASPs, the market migration
to smart phones provides the opportunity for more value added and
higher margined logistics services. Importantly, while the company
has been steadily improving gross margins since mid 2007 it has
paid down over $350M in debt. The recent earnings bump has created
a buying opportunity. We see upside to $8-10, or 12-15 times CY11
EPS estimates. -- Ceragon Networks, Ltd. (NASDAQ:CRNT $11.79;
Neutral) Ceragon Networks is a leading independent supplier of high
capacity microwave radio solutions for mobile backhaul
applications. The company offers a combination of IP and TDM based
products which offer a flexible network architecture to its
customers. The company has faired fairly well in the current
economic climate with top line results off less than 25% from 2008
peak levels. This is impressive given its relative high exposure to
markets such as India. Long-term, the growth outlook appears
healthy driven by incremental network capacity demands from mobile
data and next generation (3G and 4G) networks. However, limited
near-term visibility combined with the over 70% stock price
appreciation since the mid-summer dampens our enthusiasm. We would
wait for a better entry point or an acceleration in end markets and
are initiating coverage at Neutral. -- Cogo Group, Inc.
(NASDAQ:COGO $6.36; Buy) Cogo Group, Inc. is often over simplified
as a China handset and 3G play. While trends in these markets will
certainly impact sentiment, COGO is much more diverse with over 60%
of its revenue coming from non-wireless markets. One of the notable
non-wireless segments is Industrial (AMR, smart grid, railway,
auto, etc) which comprises 14% of revenue, up from near 0% in 2007.
Going forward we see growth in Industrial (aided by the $600B
stimulus plan), SME, new products (mobile TV, sensors, etc.),
export opportunities in wireless devices and potentially new IC
partners. With a favorable gross margin mix, operating leverage,
$2.84 per share in net cash, and a cash adjusted P/E of less than 6
times 2010 EPS, shares of COGO remain attractive with an upside of
$10-12. -- DragonWave Inc. (NASDAQ:DRWI $11.19; Neutral)
DragonWave, Inc is a leading supplier of Ethernet based radios to
IP networks. The company has done a phenomenal job of correctly
anticipating and servicing the trend of IP backhaul in next
generation networks, particularly WiMAX. DragonWave has posted over
200% growth on the back of marquee customer Clearwire's nationwide
buildout. However, the company's success has become its
intermediate-term risk as Clearwire is an 82% customer. While the
company actively pursues customer diversification, we believe large
U.S. operators will take time to make backhaul decisions.
Furthermore it remains unclear to us how existing mobile operators
will approach backhaul for its LTE rollouts, all IP or hybrid
TDM/IP. We would look to become more constructive on the stock with
better visibility to customer diversification or a pullback in
valuation. -- Palm, Inc. (NASDAQ:PALM $10.39; Neutral) Palm has
pioneered the mobile device and the smart phone. Its latest
iteration with the Pre and Pixi, based on its robust and critically
lauded WebOS, has truly revitalized the company. While the
opportunity exists to replicate the iPhone's market success and
profitability, pitfalls remain. Yes, the smart phone market is
exploding with projected 30% growth for the next several years, and
yes, non-traditional suppliers (Apple, Palm, RIM, etc.) are
garnering bigger chunks of market share. However, incremental
distribution (more carriers) and, importantly, more applications
(more than 1,600 at present) will be required to achieve success.
We estimate breakeven at approximately 1.4M units and EPS power of
$1.00 at approximately 3M units per quarter (vs. a recent 800k). We
expect a rapidly expanding operator base, but remain on the
sidelines until visibility to carrier adoption improves. --
PowerWave Technologies Inc. (NASDAQ:PWAV $1.37; Neutral) PowerWave
Technologies is well positioned to benefit from the capacity
additions required by next generation wireless networks, i.e. 3G,
LTE and WiMAX. As a fully functional mobile data ecosystem
(networks, devices and applications) continues to drive dramatic
increases in network traffic (up over 100% per year) operators will
be required to invest in incremental network capacity. Regardless
if it is on existing or next generation networks, PowerWave stands
to benefit. However, visibility remains limited given seasonality
and the infrastructure struggles of two key OEMs, Nokia and
Alcatel- Lucent (roughly 1/3 of revenue). Longer-term, we believe
new products (remote radio heads), new verticals (government) and a
modest market recovery can drive EPS approaching $0.20. We await
better visibility and are initiating coverage with a Neutral
rating. -- RF Micro Devices Inc. (NASDAQ:RFMD $3.85; Buy) RF Micro
Devices has historically fought the perception that the mobile
device market will slow, competition and integration will increase,
and gross margins will remain under pressure, in perpetuity. The
reality is the traditional device market has slowed, but new
opportunities for connectivity (PC Cards, M2M, WiMAX, WLAN, etc)
are increasing. More importantly, device complexity is driving
incremental dollar content per phone ($3-4 vs. $1-2). Additionally,
integration of the RF front end is unlikely to happen, however,
complexity within the front end itself (i.e. support of multiple
bands) is likely enabling RF Micro Devices to distance itself from
the competition. With further upside in gross and operating
margins, an improving balance sheet, strong free cash flow, and a
modest multiple of approximately 8x FY11 EPS, we believe the shares
have upside to the $7-8 range. -- Smith Micro Software, Inc.
(NASDAQ:SMSI $7.75; Buy) Smith Micro is a leading supplier of
software solutions that manage adaptive mobile connectivity and
personal digital content for enterprise, consumer and operator
customers. Its flagship, Quicklink Mobile, manages and optimizes
connectivity of mobile devices such as notebooks, netbooks and
other emerging form factors onto wireless networks. Consequently,
the company is extremely well positioned for the huge ramp of
mobile devices that is projected to drive 40% CAGR in the wireless
PC modem market. Smith Micro services seven of the top 10 north
American carriers and two of the top three PC OEMs. With limited
competition (Smith Micro acquired its closest competitor),
attractive financials and a reasonable valuation (less than 10
times 2011 EPS), Smith Micro is an attractive play on the growth in
mobile devices. We see upside to the $13-16 level and initiate
coverage with a Buy rating. -- TriQuint Semiconductor, Inc.
(NASDAQ:TQNT $6.00; Buy) TriQuint, a leading supplier of high
performance RF semiconductors, is well positioned to take advantage
of the trends in units and increasing dollar content presented by
3G/ 4G and the proliferation of smart phones and other mobile
devices. More so than any other RF IC vendor, we believe TriQuint
is leveraged to the high growth (30%) smart phone market
(approximately 35% of revenue) with key customers Apple (primary
supplier) and RIM (where TriQuint is gaining share). Additionally,
a recovery in the networking group will aid results with growth in
cable, new power devices, optical and microwave backhaul. With
expanding margins, a clean balance sheet and smart phone momentum,
shares remain attractive trading at 10x CY10. We are initiating
coverage at Buy with a price target of $9-10. Scott Searle has more
than 17 years of experience covering communications and technology
companies. Throughout his equity research career, Searle has
specialized in covering small and mid-cap technology companies at S
Squared Technology, SG Cowen, Dain Rauscher Wessels and UBS. While
at SG Cowen, Searle was named as a fast-rising analyst in investor
polls for covering communications equipment, with a specialization
in wireless technology. Members of the media can obtain a copy of
these Merriman Curhan Ford research reports by e-mailing the Equity
Research department at or by calling (646) 292-1429. About Merriman
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