Speaking seven languages, Vivian Lewis travels the world to uncover ideas for her Global Investing newsletter. She also monitors research from leading investment firms around the globe to add to her analysis.
To support her own bullish outlook on Israel-based Alvarion (NASDAQ: ALVR), she cites analyst Ehud Eisenstein of Oscar Gruss, who speculates that the firm could be a takeover target for Cisco (NASDAQ: CSCO).
Lewis explains, "Oscar Gruss did an update on WiMAX solutions company Alvarion, in which it reiterated its 'Buy' rating and raised its target price to $17 per share from $13. The analyst also seems to think it really can be a target for a Cisco Systems takeover bid.
"Eisenstein writes, 'Alvarion continues to lead emerging WiMAX. Our recent visit to the WiMAX World Conference in Chicago, and a comprehensive session with Alvarion management, lead us to believe that the WiMAX industry continues to make important strides, and Alvarion is well-positioned to maintain its leadership position in that space.'
"He continues, 'Management addressed their key technology differentiators, namely: greater cost-to-performance ratio, higher radio combinations, vendor agnostic approach, and the broad installation base.
"The Oscar Gruss analyst notes, 'We view Alvarion as a clear growth name. First, of the 200 WiMAX vendors who participated in WiMAX World last week, Alvarion is the only pure-play public company positioned to play the expected growth in WiMAX subscribers.'
"Second, he adds, the company's technology leadership and wide distribution in emerging economies position it as an apparent takeover candidate by Cisco.
"'Alvarion stands out as the most obvious acquisition target for Cisco if the latter decided to play the WiMAX Radio segment," Eisenstein continued. 'Cisco and Alvarion have been working together for several years; Cisco deploys its ASN Gateway (IP access) in Alvarion's accounts,' he added.
"Eisenstein suggests, 'Several arguments to support the Cisco-Alvarion case: Unlike past years, Cisco is no longer limiting itself to small technology deals (Scientific Atlanta was bought in 2005 for $6.9 billion and WebEx in 2007 for $3.2 billion).
"He notes that Cisco owns a large facility in Israel with more than 1,000 employees and has made dozens of acquisitions there. And, he observes, Alvarion's large installation base and legacy business will serve Cisco as an excellent entry point to the carrier market.
"Alvarion's wide distribution in small emerging markets operators should give Cisco strong entry to this world without intimidating the large telecom vendors, according to the analyst.
"Eisenstein also cited the inroads of Alvarion in Japan. He said, 'The Japanese government announced June 3 that it expected to allocate spectrum for 4G mobile services to new players by the first quarter of 2008.
"The analyst explains, 'This will be the first time in 12 years the government will open the market for competition. In our view, Alvarion is well-positioned to become a significant player in this lucrative market by late 2008.' He adds, 'In August, Alvarion announced collaboration with Hitachi to develop a broadband mobile WiMAX system, and we believe the two companies are aggressively pursuing WiMAX opportunities in Japan.'"
Each day, Steven Halpern's TheStockAdvisors.com features the latest stock picks and investment ideas from the nation's leading financial newsletter advisors.
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