B.C. wireless equipment maker bets on WiMAX

The billions being pumped by governments into economies around the world may soon help nudge telecommunication carriers to start spending on equipment, a Vancouver-area broadband wireless company hopes.

Jim Tocher, president and CEO of Tranzeo Wireless Technologies, a Vancouver-area maker of indoor and outdoor access points said Tuesday that since that money started flowing last fall “the amount of inquiries and the activity at our base station partners has increased dramatically.

“So as we move forward into 2009 we see that spending and the infrastructure build up (will) help us dramatically with our WiMAX business.”

Tocher made his remarks in a conference call with financial analysts explaining the company’s 2008 fiscal results, which saw it lose $1.8 million on sales of $19.4 million, compared to a net earning of $1 million in 2007. In the fourth quarter it sold $3.2 million in product compared to $4.4 million in the third quarter. Part of that loss included writing off some inventory. As a result, the company laid off some staff and did some cost cutting before the year ended.

Like other Canadian makers of access and backhaul radios, such as DragonWave Inc. and Bel Air Networks of Ottawa and Markham, Ont.’s Redline Communications, Tranzeo is betting heavily on WiMAX. WiMAX is a medium range wireless technology also known by its IEEE designation of 802.16. Until recently, it was largely used for fixed access and backhaul, but products built around a mobile version, 802.16e, are starting to be tested. Clearwire’s Clear service in the U.S. is counting on 802.16e-based mobile devices to hit the market soon.

More on this wireless technology

The 5Ws of WiMAX

Tranzeo introduced its WiMAX pico base stations and subscriber units for the licenced 3.5, 3.65 and unlicenced 5.8GHz bands in the second quarter of last year and immediately saw sales gains in each quarter. In fact Tocher credited those sales as being the main reason sales were up last year over 2007. The U.S. Federal Communications Commission recently approved the company’s 3.65-3.70 GHz Pico Base Station, which started to ship last month. “We’ve seen very good take up on that product,” Tocher said, “and we feel that is going to have a good impact in Q2 and going forward.”

While carriers and service providers have become cautious about spending in the last six months, an industry analyst suggests manufacturers’ faith in WiMAX is not without justification. In a recent report Kirsten West, principal analyst at West Technology Research Solutions in Mountain View, Calif., concluded that while there may be some delay in deploying WiMAX infrastructure in the short term, there will be “a timely resurgence.” In an interview West the recession will depress WiMAX spending for about 18 months, largely because carriers are targeting it at workers on the go. But business layoffs are making carriers hesitate.

“On the other hand, that makes it an excellent time for companies to build out infrastructure right now and ready end-products and foster innovation so they can attract new customers for WiMAX customers once we’ve passed through this period.”

For example, she praised Clearwire for vowing expand its WiMAX-based Clear service to 80 cities by the end of 2010 despite the economic upheaval in the U.S. “Once people aren’t so nervous about the economy they’re going to be looking to these new services, and if Clearwire is ready that’s going to bolster the market for WiMAX.”

As for devices, Toshiba and Acer have promised to sell laptops with WiMAX capability in cities where Clear has service. At last month’s CTIA Wireless conference in Las Vegas, Samsung pulled the covers off the Mondi, a Windows Mobile device with a 4.3-in. sliding screen for data-only access to the Clear network.

Meanwhile, mobile WiMAX is still in small trials in Canada.

With some understatement, Tocher noted in the conference call that “the world economy has had a few hiccups,” which resulted in a chain reaction: Carriers took longer to make spending decisions, he said, which hit base station partners Tranzeo teams with on bids.

One financial analyst impatiently wondered where the “big deals” the company alludes to will be translated into top and bottom line numbers. “In the past we’ve got purchase orders from our base station partners with forecasts, and their forecasts have been out,” Tocher acknowledged.

Referring to the company’s high inventory that had to be written off, he said at another point that “we took a lot of the forecasts at face value.”

Now, he said, Tranzeo is “more intimate with all the base station partners.” “What we’re seeing now is infrastructure spending in India, in Indonesia and even in the U.S. picking up,” he added. “From the WiMAX standpoint, we do see some contracts actually starting to ship this quarter, and we think that will only increase.”

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