Top Picks 2007: Hutheesing sees WiMax gains from Airspan

Posted Dec 28th 2006 2:30PM by Steven Halpern
Filed under: Newsletters, ETF Investing

Each year Steven Halpern, editor of TheStockAdvisors.com, surveys the leading financial newsletter advisors asking for their favorite stocks for the coming year. This article is part of his 24th annual Top Picks Report.

Airspan Networks (NASDAQ: AIRN) is the favorite speculative idea for 2007 from Nikhil Hutheesing. The editor of The Forbes Wireless Stock Watch explains, "It's clear that over the course of 2007 and into 2008, WiMax (a high-speed next generation wireless network) will become a big story for wireless stocks.

"Investors should consider investing in some potentially exciting WiMax companies now, before hype and WiMax rollouts drive stock prices up. One way is to buy shares of Airspan Networks, a company that makes equipment for these networks.

"Shares of the Boca Raton, FL-based company have fallen about 60% since April of this year because of uncertainty in orders from two customers. One is Yozan, a Japanese wireless carrier that was the first to provide WiMax service in Japan. The other is Axtel, a Mexican telecom operator.

"Together, these companies contributed more than 60% of Airspan's revenues in 2005 and will still contribute about 40% this year. But both companies are having their own internal problems, which could lead them to discontinue their business with Airspan.

"But if you look beyond the immediate hit Airspan would take if it loses these big customers, the opportunities look good. Not only is WiMax a big, new, growing opportunity for the company, but Airspan is also restructuring its business, reducing headcount related to its older businesses, while increasing headcount for WiMax development.

"The company expects the new focus on high-speed wireless will result in a 25% reduction in operating expenses at the company in 2007. Even though Airspan will have to increase spending as WiMax ramps up, Aronstam says that the company will now save about $8 million per year. Investing in Airspan is not for those who can't tolerate risk and volatility. But I do believe that patient investors will profit. I have a target of $6 for shares of AIRN."

To see Nikhil's favorite conservative wireless idea for 2007, click here.