- Sprint/Nextel's >$3bn WIMAX investment contrasts poorly with xG's claimed ability to give full US coverage for $15m (this is not a typo, that's 99.5% discount folks);
- to justify the $650 - 700m valuation: "...over the two years of the forecast period, xG need only achieve a roll out of 500 base stations at 20% capacity to achieve our numbers; it already has LOIs (letters of intent) indicating demand of $20m, the equivalent of demand for 400 base stations.";
- "On a reverse DCF model, on the basis that bid interest from established participants needing to cover their technology bets is likely, and on the grounds that the shares will represent a "hedged option" equivalent in any clients' portfolios exposed to the telecoms sector, we suggest that xG's shares are the only genuinely compelling investment we have seen in years."
I have to say, the last quote is fairly incendiary phrasing for a broker intimately involved in the IPO. That is a trivial concern, however. What really matters is the gap between presentation and reality. For a company to come to market with such a punchy story without substance would be a totally unnecessary, suicidal act, particularly when the amounts of money to be raised (£30m) look so trivial relative to the disruptive potential. So, we must give the company the benefit of the doubt - or is that part of a head-fake? This is going to be a fascinating deal to watch.