Investors aren't going to find too many small companies with PCTEL's (Nasdaq:PCTI) record of returning cash to shareholders. In addition to paying a special dividend a few years ago, the share count here has declined about 20% since 2007. All of this has been achieved despite a clear breakout product and the fact that revenue for 2011 was more than 10% below the level back in 2006.

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Unfortunately, value-oriented tech companies seldom get their due. While PCTEL has a decent business in antennas and mobile network test equipment, it's going to take more than that to make the shares really exciting. Luckily for investors, there is an iron in the fire that just might make this a more interesting name in the future.

Sluggish Results Par for the Course
PCTEL is not well-followed, but the company has been doing relatively well when compared with expectations. That said, growth is not exactly superb. Revenue rose 8% in the fourth quarter (reported in late February) and though the company did alright, again relative to expectations, guidance from management calls for pretty flat performance on a sequential basis.

Will Chinese Delays Derail the Story?
PCTEL has been trying to grow its international business, in part by focusing on products like scanning receivers for the Chinese TD-LTE market. Unfortunately, Chinese officials seem to be dragging their feet on the migration to 4G and that could hurt growth expectations. On the other hand, PCTEL already has some business with China Mobile (NYSE:CHL) and equipment OEMs like Huawei and Alcatel-Lucent (NYSE:ALU), and there is certainly ongoing demand for TD-LTE equipment for older generations.

Will a Hack-Proof Phone Secure the Future?
One of the most interesting projects going on at PCTEL is a venture developing what is called ProsettaCore - technology aimed at securing mobile devices from hacking attempts. This security approach uses multiple defenses (including encryption) and runs between the operating system, applications and physical resources, to secure it both from active hacking and passive eavesdropping.

From the sounds of it, this is military/government-spec technology and the government is likely to be the initial target customer. While the government has not always been accommodating when it comes to permitting civilian uses of secure technology, it doesn't seem unreasonable to think that there could be eventual commercial applications for it.

If this really works, it would seem unlikely that PCTEL will enjoy that success for long as a public company. Harris (NYSE:HRS), Motorola Solutions (NYSE:MSI) and General Electric (NYSE:GE), all current PCTEL customers to begin with, would certainly have use for that sort of technology in their existing businesses, to say nothing of other defense electronics contractors.

Steady, Albeit not Spectacular, Otherwise
PCTEL has a decent business, as is, in antennas and test equipment. The company's share in scanning receivers is probably in the 30 to 40% range and already boasts customers like Verizon (NYSE:VZ) and AT&T (NYSE:T), while the aforementioned China opportunity could add a little growth.

The antenna business is also a stable growth opportunity. Out of an addressable market of maybe $400 million to $600 million, PCTEL seems to have about 10% share, with antennas for mobile land radios, WiFi/WiMAX, GPS and so on. While there is an interesting opportunity in providing antennas to allow companies to use unlicensed spectrum (via 802.11/WiFi) to offload data traffic, it's arguably not a transformative opportunity for the company.

The Bottom Line
With nearly $62 million in cash and investments on the balance sheet, it's pretty clear that Wall Street does not assign a huge value to PCTEL's business or growth prospects. To a point, this is fair - management has done a good job of maximizing the value of its assets, but growth has been decidedly lacking for quite some time.

PCTEL produces less cash than it used to, but still enough that a private equity takeout could offer some floor to the stock. Odds are, though, that PCTEL Secure and ProsettaCore really needs to work out for the stock to be a real success.

As it is, PCTEL is a stock with relatively modest downside and interesting upside - a situation where "dead money" may in fact be the biggest risk to investors. Single-digit cash flow growth can power a price target in the $9s, so this may be a stock to consider for investors who like over-looked and under-followed ideas. (For related reading, see 10 Tips To Clear Your Portfolio's Dead Weight.)

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At the time of writing, Stephen Simpson did not own shares in any of the companies mentioned in this article.