Tessco Ahead of Earnings: Value in Mobile Broadband

Includes: S, T, TESS, VZ
by: Mike Havrilla

Tessco Technologies (NASDAQ:TESS) is a leading provider of a full range of product and supply chain solutions for building, operating, and using wireless systems. TESS offers over 25,000 products from over 350 manufacturers with a value proposition, Your Total Source, which delivers a broad range of mobile devices and accessories, mobile and fixed-wireless network infrastructure products, test/maintenance equipment/supplies.

The Company’s operational platform, which it refers to as its Knowledge, Configuration, Delivery and Control System (KCDC), provides availability and delivery to the point of use. TESS serves an average of about 9,000 commercial customers and 2,300 consumers per month, including a mix of carrier and public network operators, infrastructure site owners, program managers, contractors and integrators.
Tessco is well positioned to capitalize on the exploding world of wireless with estimated mobile wireless broadband users expected to grow from around 10 million to 300 million subscribers by 2020. Customers include AT&T (NYSE:T), Sprint Nextel (NYSE:S), and Verizon (NYSE:VZ). TESS will focus on higher margin proprietary products, improved productivity, the Obama rural broadband stimulus plan, and more feature-rich handsets to drive future profit growth.
TESS has about 4.7M shares of common stock outstanding with a float of around 2.5M. Results for fiscal 3Q09 included revenue of $118.9M (versus $135.7M in 3Q08), operating income of $2.4M (versus $2.7M in 3Q07), operating margin of 2.0% in both periods, and EPS of $0.25 (versus $0.29 in 3Q07), resulting in a trailing PE of about 6X.
TESS will announce its 4Q and full-year results for the 2009 fiscal year after the market close Thursday 4/30 and will hold a conference call on Friday 5/1 at 10am ET. The number for the call is 888.713.4215 (ID #37195531).

Disclosures: None