Better Than Fiber for Your Cell Diet

08/16/2007 12:00 am EST

Focus:

Jim Collins

Chairman and CEO, Insight Capital Research & Management, Inc.

Jim Collins, editor of OTC Insight, recommends a company whose technology is surpassing fiber—in speed and cost…

Ceragon Networks Ltd. (NASDAQ: CRNT) engages in the design, development, manufacture, and sale of point-to-point wireless backhaul solutions. Ceragon Networks’ products are primarily used by cellular operators, and by organizations and enterprises. The company sells its products through a direct sales force, systems integrators, distributors, and original equipment manufacturers in North America, Europe, Middle East, Africa, Latin America, and Asia-Pacific.

Ceragon Networks was founded in 1996. It was formerly known as Giganet, Ltd. and changed its name to Ceragon Networks, Ltd. in 2000. The company is headquartered in Tel Aviv, Israel. Ceragon’s products provide high-speed, fiber-like transmission quality, and can be deployed more rapidly and cost effectively than fiber-optic lines. Its products consist of a compact high-performance antenna, an outdoor unit, an indoor unit, and Ceragon’s SNMP-based proprietary network management software.

As a leader in the global high-capacity wireless infrastructure market, Ceragon’s FibeAir product family was uniquely designed for carriers, both in the cellular and the fixed operator markets and for private networks, to progressively build networks that meet the growing demand for value-added broadband services. Ceragon’s intelligent solutions offer carriers the capacity and reliability of fiber without the high cost and time required to lay lines. Operating across multiple frequencies, the modular FibeAir product family supports integrated services and offers innovative built-in add/drop multiplexing and encryption functionality.

For the quarter ended June 30, 2007, Ceragon reported net income of $0.09 per share, compared to $0.04 reported in the prior year. Total revenue increased 58% to $37.3 million compared to $23.6 million reported last year. Based on strong bookings and record backlog during the quarter, CRNT raised full-year revenue growth from about 30% to 40% over 2006.

The market for wireless equipment is rapidly evolving, fragmented, highly competitive, and subject to rapid technological change. Additionally, the worldwide telecommunications industry is dominated by a small number of large corporations. As a result, in certain fiscal quarters, relatively few customers have accounted for a large percentage of Ceragon’s revenue and it is expected that a significant portion of future product sales will continue to be concentrated in a limited number of customers.
 
Ceragon’s stock reached an all-time high on July 25, 2007 before retreating modestly. Of the approximately 21.1 million shares in float, 685,000 trade daily. Banks and mutual funds own 29% of the shares outstanding. The company has a relative strength of 99 and receives a rating of A+ for accumulation/distribution.

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