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Powerwave And Andrew Corp Move Together
Wireless equipment makers Powerwave Technologies (PWAV) and Andrew Corporation (ANDW) rode the upward trend of the overall market, touching $15 and $14 a share respectively in March. A host of factors including an industry wide decline in demand by wireless services providers and increasing commodity prices of raw materials like copper contributed to drastic downturns in net income for both Powerwave and Andrew Corporation during their most recent quarters. Powerwave's Q1 ended April 2nd while Andrew Corporation's Q2 ended March 28th. Given their unique niche in the wireless infrastructure market, investors could benefit from this most recent pull back by focusing on the companies underlying value.
Similarities
Powerwave's Q1 net sales increased 19% to $193 million, while net income dropped from $5.4 million to -$2.9 million. Andrew's Q2 net income dropped to $3.6 million from $15.3 million when compared to the same period one year ago. Powerwave pointed to significant slowdowns in wireless infrastructure spending from Cingular, the nation's largest wireless carrier serving 55 million customers. Last year Cingular made up 15% of net sales for Powerwave. Other major Powerwave customers include Nokia (NOK) and Siemens (SI).
Cingular's decrease in wireless infrastructure spending also negatively impacted sales for Andrew, whose overall revenue for the quarter remained flat at $482 million from a year ago. Andrew's sales of antenna and cable products along with base station subsystems to Lucent (LU), Nortel (NT) and Siemens made up for the difference. Despite languishing demand and rising commodity prices, both companies pumped additional dollars into R&D to improve upon their existing wireless equipment products during the respective quarters. Powerwave Technologies and Andrew closed at $10 and $9.84 respectively on Wednesday.
Differences
While Powerwave and Andrew both have international operations, Powerwave generates approximately 70% of its revenue outside of the U.S., while Andrew Corporation's is closer to 45%. The 2006 World Cup chose Andrew to boost the wireless signals available to the tens of thousands of fans around the world who are expected to descend on Germany's stadiums signaling to investors that its international presence is intact and likely to grow.
Another difference to note is that Andrew has a more diverse product line that includes cable products that made up more than half of its 2nd quarter revenues. Andrew is also trading right around its $9.76 book value which is a good sign for value investors who are seeking undervalued firms.
Investors should always look for value in their investments. Powerwave and Andrew have similar customers, products and stock valuations that make them an attractive pair for investors to investigate. As wireless service providers compete for customers and expand the reach of their signals, Powerwave and Andrew Corporation are likely to benefit.
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Similarities
Powerwave's Q1 net sales increased 19% to $193 million, while net income dropped from $5.4 million to -$2.9 million. Andrew's Q2 net income dropped to $3.6 million from $15.3 million when compared to the same period one year ago. Powerwave pointed to significant slowdowns in wireless infrastructure spending from Cingular, the nation's largest wireless carrier serving 55 million customers. Last year Cingular made up 15% of net sales for Powerwave. Other major Powerwave customers include Nokia (NOK) and Siemens (SI).
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Cingular's decrease in wireless infrastructure spending also negatively impacted sales for Andrew, whose overall revenue for the quarter remained flat at $482 million from a year ago. Andrew's sales of antenna and cable products along with base station subsystems to Lucent (LU), Nortel (NT) and Siemens made up for the difference. Despite languishing demand and rising commodity prices, both companies pumped additional dollars into R&D to improve upon their existing wireless equipment products during the respective quarters. Powerwave Technologies and Andrew closed at $10 and $9.84 respectively on Wednesday.
While Powerwave and Andrew both have international operations, Powerwave generates approximately 70% of its revenue outside of the U.S., while Andrew Corporation's is closer to 45%. The 2006 World Cup chose Andrew to boost the wireless signals available to the tens of thousands of fans around the world who are expected to descend on Germany's stadiums signaling to investors that its international presence is intact and likely to grow.
Another difference to note is that Andrew has a more diverse product line that includes cable products that made up more than half of its 2nd quarter revenues. Andrew is also trading right around its $9.76 book value which is a good sign for value investors who are seeking undervalued firms.
Investors should always look for value in their investments. Powerwave and Andrew have similar customers, products and stock valuations that make them an attractive pair for investors to investigate. As wireless service providers compete for customers and expand the reach of their signals, Powerwave and Andrew Corporation are likely to benefit.
by
Gregory S. Davis
Gregory is a freelance writer for Investopedia.com. He has a consulting background in the banking, telecommunications and healthcare fields. Gregory is a graduate of the Wharton School of Business. Click here to visit his website.
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