Monday, August 21, 2006

Calls of Note Part 4

- Oppenheimer notes that UK-based Pipex will begin deploying Airspan (NASDAQ:AIRN) equipment for the first of a multi-phase WiMAX rollout later this year, with an official announcement possible next month. This is earlier than we had expected, and recently, Pipex has begun to provide more detail about rollout plans in additional metro markets. In the context of Sprint's "blessing" of WiMAX as its 4G technology and Pipex Wireless's significant spectrum holdings, we wonder if the decision by Pipex and Intel to spin-off a subsidiary of the UK operator earlier this year is prologue to a possible acquisition of Pipex Wireless by British Telecom. As far as they know, Airspan is the only provider supplying WiMAX equipment to Pipex Wireless.

Firm sees some option value in the potential for a UK deal not reflected in Airspan's current price.

They note the shares have begun to recover but they think there is too much Yozan risk priced in; at the same time, we think not enough upside related to WiMAX's recent momentum gains in major metropolitan areas is reflected in AIRN. This is not to suggest that Airspan is without risk " it remains a high-risk "story" stock. Firm just thinks the story is getting better. With the shares at 0.6x 2007 revenue forecast and less than 10x a preliminary 2008 earnings per share forecast of $0.25, they see more upside than down.

And with a market cap of less than $100 million they also view Airspan as a potential take-out target.

Maintains $8.50 tgt (guess what the rating is).

Notablecalls: Like the note. Would risk 10 cents just for the hell of it.

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