CNBC's Jim Cramer mentioned Ceragon Networks Ltd. (Nasdaq: CRNT; TASE:CRNT), which I hold in my portfolio tracked by "Globes", as well as Harris Stratex Networks, Inc. (Nasdaq: HSTX) on Friday, and Ceragon shares rose more than 7% on Monday.
Both companies provide wireless backhaul solutions - thickening broadband network capacity between the communications towers and the central points behind them. The potential is great in many places in the world, except for China, which Cramer erred in naming as a customer of Ceragon's.
India yes; but not China. China, which does not have problem of human resources or government budgets, prefers to run expensive fiber optic cables underground between the communications towers across China instead of cheaper and more effective wireless solutions, such as Ceragon's.
There are those who think that China's decision also has to do with security reasons, since it is easier for someone from outside to eavesdrop on wireless lines than on underground cables.
In the US, as well, telecommunications giant AT&T prefers, for professional reasons, the fiber optic cable option over wireless. Because of the tremendous load on its networks from iPhones, which only AT&T sells in the US, AT&T plans to set up by the end of the year another 2,000 communications towers with the goal of reaching, by the end of the year, a situation in which 60% of the communications volume between towers travels over fiber optic cables, and where 40% of its communications towers will be connected with fiber optic cables.
The big potential for Ceragon in the US is found with AT&T's big competitor, Verizon (NYSE: VZ), which is moving primarily toward wireless solutions between towers. Verizon is set to invest billions of dollars in infrastructure ahead of the running of its 4G LTE network next year. Ceragon has already announced that it has been chosen in principle as an authorized supplier to Verizon, and is now working hard to win orders. I wonder if Cramer knows something which the public does not yet know about large orders that Ceragon may soon receive from Verizon.
Customers return to normal at EZChip
This week will be filled with investor conferences, and EZchip will be at two. It will be interesting to hear what its managers have to say, because in my opinion they are on the verge of closing a quarter which was stronger than the first quarter, when they had sales of $9.8 million, before the great collapse to $6.7 million in the second quarter. In the third quarter, they will also return to showing growth over the corresponding quarter of the previous year.
It will happen because Juniper returned to a usual pace of orders, and I assume that there will be a few more quarters until it ceases to be a significant customer, as EZchip warned in its second quarter results. On the other hand, industry leader Cisco is increasing its pace of orders from one quarter to the next through Marvell, and in the third quarter, too, I believe it will be a customer representing over 10% of sales.
Published by Globes [online], Israel business news - www.globes-online.com - on September 15, 2009
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