Dragonwave Update

Dragonwave has fallen to below the value of the cash in the bank. Basically they have about $2.40 in cash and the shares are selling for $2.20. Now the market is killing these small technology companies because of the high risk that if a further recession occurs, and sales stall, they will go under from cash burn. In DRWI case the additional confusion has occurred in that they have recently backed into a takeover, where they have in fact taken over a larger company. This is the microwave backhaul business of Nokia Siemens Networks  a global supplier of backhaul solutions with huge customers around the globe. This is a different business, they have moved from designers of microwave IP backhaul to sellers and installers on a global basis. I think this was a life saving merger for DRWI. Basically they came up against the "big boys" of networks, whose solutions were not so good, but who had the ear of the world wireless CEO's. So despite having better mousetraps, they were up against guys well over their weight, who would tell the CEO, if you buy from us we can support it all, if you buy from them, a small company you may end up being hung out to dry. Its the old IBM story, you can't go wring buying IBM used to convince thousands of CEO's in the 60's and 70's.

Now DRWI is a player itself, and Nokia Seimens has a good reputation and can talk to the CEO's on equal terms to the Huwais and Alcatels and Motorolas.

Unfortunately all this has made the share value proposition confusing and clarity will not come for a while as the two players work together and hopefully get some wins. Meanwhile the shares languish.