As of March 16, Alvarion is down about 27 percent on a year-to-date basis, and that is at least 10 percent points more than the broader market averages. What is more important from an investor perspective is that 84 percent of its current market capitalization is in cash and the company has no debt.
In essence, the market is saying that the enterprise value of this company is worth only 0.09-times estimated 2009 revenue estimates. That’s an amazingly low figure when you consider some others in the communications equipment space as shown in the table below.
Table 1: Communications Equipment Suppliers
|Enterprise Value to Sales Comparisons|
|Source: Yahoo Finance|
This BSNL contract is a seminal event for Alvarion, in my opinion. Should they win, it would propel Alvarion to the top tier of vendors that are considered in all future WiMax installations. But should they lose, they'd be kept in the position of constantly having to get noticed and separate themselves from their much larger competitors. It’s not life or death for the company, per se; that will be determined by their profit and loss statement. But it is very important from the perspective that Alvarion has the opportunity to hit the long ball from a very big stage.
We should not have very long to wait because a final decision from BSNL is expected to be made in very short order. For now, all each of the vendors can do is sit and wait.
— Bob Faulkner, Unstrung