The Company’s wireless coverage solutions are designed to enhance the quality of reception over wireless networks, while simultaneously reducing operating costs for the client carriers—a competitive advantage over competitors. Telestone is a small-cap company off the radar screen of most Wall Street telecom analysts. For investors--Telestone represents a pure play on the future of the Chiness wireless market, for 100% of sales originate in the PRC.
The Chinese authorities are expected to award 3G licenses to service providers later this year, as the country readies its high-speed network in time for the 2008 Olympics in Beijing. China's future 3G mobile network will use a home-grown TD-SCDMA standard co-developed by Siemens.
Telestone recently landed an OEM contract with China Ericcson, which has a potential value of approximately $50 million over three-to-five years. More importantly, this deal positions Telestone to deepen its market penetration and to develop and market a series of 3G products for use on Ericsson’s wireless network platforms in the PRC, other Southeast Asian nations, and India.
Telestone is financially sound, with a current ratio better than 2:1, and no long-term debt.
Even without the inclusion of revenue generated from the upcoming 3-G deployment in China, management still expects top-line growth and share-net EPS in the order of 20%-to-30% year-over-year. We do, however, expect a big impact on revenues and profitability, assuming a 2H:06 deployment of the 3G technologies in the PRC. Our early estimates call for Telestone to show top-line of approximately $55 million, throwing of share-net of $0.50 [assuming 10 million shares, fully-diluted]. For aggressive investors willing to assume the inherent risk of owning a small-cap company, we recommend dialing up your broker and buying some shares.