Lehman Brothers Upgrades WiderThan (WTHN, CMVT, OPWV)

In a recent note to clients, Lehman Brothers analysts Jeff Kvaal and Tim Luke upgraded WiderThan to Overweight with the following rationale:

• Our checks indicate a healthy 2006 outlook at key customer Verizon for ringback tones and music on demand. Sprint's Music on demand recently passed 1M downloads.

• Korea revenue appears solid given steady Ringback tone sales and a healthy Music on demand uptake. We believe early India uptake is strong.

• European wins are also likely in 1H06.

• We expect WTHN to deliver 4Q05 results at least in line with consensus estimates of $31M/$0.16 in early March.

• 2006/2007 EPS ests of $0.76/$0.98 (ex ~$0.10 option expense) yield multiples of 18x/13x, solidly below those of closest comps Comverse (CMVT) and Openwave (OPWV).

• WTHN may merit a discounted valuation (customer concentration, slow Korea growth). However, given its low end valuation, healthy end markets, and solid upcoming 4Q results, we expect the shares to rise.

Note WTHN's performance since its IPO in December, compared with competitors OPWV and CMVT.