Monday, March 27, 2006

Gigabeam: Reversal in Fortunes

On February 15, 2006, with the stock selling at $9.oo per share, we said that there was no compelling reason to buy Gigabeam Corp. (GGBM-$10.80), a manufacturer of wireless point-to-point communications equipment designed to operate in the 71-76 GHz and 81-86 GHz radio spectrum bands, which were authorized by the FCC, in October 2003, for commercial use.
At the time, our investment thesis argued that: "although the ability of GigaBeam’s management team to integrate its WiFiber architecture with component suppliers was impressive, the backbone of corporate to bring costs in line and to reach breakeven or profitability was equally unimpressive."
"Looking ahead, we went on to say, "GigaBeam was but one of many WiFiber companies with cost-efficient “bridging” technology. The Company, with an enterprise value of $45.69 million—had a valuation grounded solely on its potential promise."

The 10Q Detective believes that there are now compelling reasons to buy GigaBeam. First, the Company has received several purchase orders for its WiFi products. Second, corporate has been aggressive in signing new channel partners to penetrate the market. Third, GigaBeam recently announced that it had received approval to trade on the NASDAQ. In our opinion, this heightened exposure that the listing offers will broaden the interest in the Company to a broader investor base.

The stock has the potential to trade higher on momentum alone. First target, $15.00 per share.

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