Merriman Curhan Ford Initiates Coverage on the Communications/Wireless Technology Sector

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.

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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.

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