PCTEL, STRATEX PAINT BRIGHT MARKET FORECAST

Wireless connectivity software developer PCTel and broadband fixed wireless vendor Stratex Networks provided further evidence at last week's Needham & Co. Growth Conference that wireless companies are focusing on growth rather than just digging in for another tough year.

For PCTel, acquisitions and other aggressive business tactics have transformed a mundane modem supplier into a Wi-Fi and software juggernaut during the last 18 months. The most recent evidence: PCTel's acquisition last week of antenna vendor MAXRAD, which is forecasting Wi-Fi as its biggest future revenue opportunity. PCTel earlier acquired Wi-Fi roaming software developer cyberPixie and software defined radio innovator DTI.

“It's almost like something out of biology where a company has evolved to be a completely different animal,” said Anton Wahlman, Needham & Co analyst covering broadband access technologies. “A lot of that is due to the CEO and management team executing on a strategy to grow.”

PCTel CEO Marty Singer said in many ways that the company's transformation was a matter of survival.

“If you look at what PCTel was a year ago, with just 70 patents and a money-losing modem business, we have come a long way,” he said. “We divested the modem business, gained patents to give us as many as 130, and acquired companies to give us new market opportunities. We've successfully executed our transition strategy.”

Another element of the company's growth was its aggressive effort to settle patent infringement cases with Intel and other companies that brought Chicago-based PCTel past-due revenue and new licensees for its technologies. PCTel still has an outstanding patent infringement suit against 3Com, but Singer said the company's ability to “solve these other issues without litigation should help our case with 3Com.”

Another CEO presenting at the Needham event in New York City, Chuck Kissner of Stratex Networks, told the crowd things were looking up in the near future. “We started seeing more request-for-proposal activity [late last year], reflecting some capex equilibrium in the industry,” Kissner said.

Similar to PCTel, Stratex emerged from a difficult period with an aggressive attitude. The company acquired Plessey Broadband and Innova to give it new presence in the European/Middle East/Africa market and other markets.

Stratex also has begun marketing its new Eclipse microwave node package — effectively a two-generation jump from its current technology that's designed to phase out its other product lines, Kissner said.

The development of the Eclipse platform began more than 18 months ago, and was driven in part by Stratex's ambition to cut operation-related costs from existing mobile backhaul platforms.

“We have done a lot of work to expand the market opportunity for this company,” Kissner said. “We pulled the plug on some other product development efforts, leaned out the cost structure significantly and are looking at a new platform to drive revenue starting now through 2006,” he said.