Podcast Audio | Posted by Phil Leigh on June 29, 2011
A maker of radio transceivers and related hardware for the Wireless ISP industry recently filed papers with the Securities & Exchange Commission seeking authorization to sell stock to the public. Silicon Valley based Ubiquiti Networks plans to offer $200 million worth of stock. Some of the shares will be sold by existing shareholders which includes a venture capital firm as well as members of management. The venture firm has held the shares less than 18 months. As yet, there is no indication of the price at which public shares will be sold.
We have no opinion on the merits – or demerits – of the Ubiquiti Networks stock offering.
As the table below illustrates, revenues have grown rapidly. The company’s fiscal year ends tomorrow. From Fiscal 2008 to Fiscal 2010 sales grew from $22 million to $137 million. For the first three-quarters of Fiscal 2011 sales were up 34% from $97 million to $130 million.
Over four-fifth’s of the growth during the first three-quarters of this fiscal year is due to expansion in Latin America. As indicated in the following table the company defines the largest sales region is Europe-Africa-MiddleEast with 36% of the total. North America (including Canada) is second with 30% while Latin America is 25%. Over 70% of sales are outside the United States.
Clearly Ubiquiti has been doing something right. Their impressive growth was achieved without a direct sales force. Our industry sources suggest that Ubiquiti equipment is particularly attractive in developing countries and among rural domestic WISPs where wireless bandwidth is not yet congested. Principal competitors include Motorola Solutions, Alvarion, and Trango Systems.
Wall Street is beginning to take note of the Wireless ISP industry. Nonetheless, most participants remain family-owned businesses, including operators and equipment makers. The advent of smartphones and tablet computers combined with a growing subscriber interest to avoid expensive bundled-services required by CATV and telco ISPs, will likely create sizeable business opportunities for the industry.
Yet, without the required capital, participants may be overwhelmed by outsiders and better financed incumbents. To that end, we invite sponsors for our Wireless IPS Industry research report which can help educate bankers. To learn more contact me at 813-837-3631 or by email.