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

Name	Symbol	Market	Type
Wt At1coco Gbph	LSE:COGO	London	Exchange Traded Fund

	Price Change	% Change	Price	Bid Price	Offer Price	High Price	Low Price	Open Price	Traded	Last Trade
	27.00	0.31%	8,767.00	8,735.00	8,799.00				84	16:35:09

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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 Curhan Ford Merriman Curhan Ford (NASDAQ:MERR) is a financial services firm focused on fast-growing companies and the institutions that invest in them. The company offers high-quality investment banking, equity research, institutional services and corporate & venture services, and specializes in five growth industry sectors: CleanTech, Consumer, Media & Internet, Health Care, Natural Resources and Technology. For more information, please go to http://www.mcfco.com/. Important Disclosures This research has been prepared by Merriman Curhan Ford & Co. (MCF & Co.), a wholly owned subsidiary of Merriman Curhan Ford Group, Inc. Some companies MCF & Co. follows are emerging growth companies whose securities typically involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in MCF & Co. research reports may be unsuitable for some investors depending on their specific investment objectives, financial status, risk profile, or particular needs. Investors should consider this report as only a single factor in making their investment decisions and should not rely solely on this report in evaluating whether or not to buy or sell the securities of the subject company. Regulation Analyst Certification ("Reg. AC") All of the views expressed in this research report accurately reflect the research analyst's personal views about any and all of the subject securities or issuers. No part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in the subject company of this research report. Research analysts are not directly compensated for specific revenue generated by the firm's investment banking transactions/activities. General Disclosures MCF & Co. expects to receive or intends to seek compensation for investment banking services for all of the companies in its research universe in the next three months. Investors should assume that MCF & Co. is soliciting or will solicit investment banking or other business relationships from the companies covered in this report in the next three months. Security prices in this report may either reflect the previous day's closing price or an intraday price, depending on the time of distribution. Designated trademarks and brands are the property of their respective owners. Specific Disclosures MCF & Co.'s full research universe and related disclosures can be downloaded from http://www.mcfco.com/ and http://mcfco.com/footer/docs/Disclosures.pdf. Applicable current disclosures for this report can be obtained by contacting or via postal mail at Editorial Department, Merriman Curhan Ford, 600 California St., 9th Floor, San Francisco, CA 94108. Key to Investment Rankings (expected total share price return inclusive of dividend reinvestment, if applicable) ------------------------------------------------------------- Percent of companies under research coverage from which MCF & Co. received compensation for investment banking services provided in the previous 12 months or expects to receive or intends to seek Percent of No. of in the next Rating Universe Stocks Description three months ------ ---------- ------ ----------- --------------- MCF & Co. expects the stock price to appreciate 10% or more over the next 12 months. Initiate or increase Buy 64% 58 position. 8% --- --- --- ------------------- --- MCF & Co believes the stock price is fairly valued at current levels. Maintain position Neutral 32% 28 or take no action. 1% ------- --- --- ------------------ --- MCF & Co. expects the stock price to depreciate over the next 12 months. Sell or decrease Sell 4% 4 position. 1% ---- --- --- ------------------- --- MCF & Co. archives and reviews outgoing and incoming email. Such may be produced at the request of regulators. Sender accepts no liability for any errors or omissions arising as a result of transmission. Use by other than intended recipients is prohibited. The information contained herein is based on information obtained from sources believed to be reliable but is neither all-inclusive nor guaranteed by MCF & Co. No independent verification has been made as to the accuracy or completeness of the information. Opinions, if any, reflect our judgment at the time the report is first published and are subject to change without notice. MCF & Co. does not undertake to advise you of changes in its opinion or information. Member FINRA / SIPC. Copyright © 2010. All rights reserved. Additional information supporting the statements in this report is available upon request. http://www.newscom.com/cgi-bin/prnh/20090911/MCFLOGO http://photoarchive.ap.org/ DATASOURCE: Merriman Curhan Ford CONTACT: At the Company, Charles Mastellone, Supervisory Analyst of Merriman Curhan Ford, +1-646-292-1429, Web Site: http://www.mcfco.com/

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