Just this morning, EAGB announced a second order of 500 IPTV set-top boxes from an unnamed hospitality customer as part of a $6.4 million, 13-month contract. Although, if completed successfully, the deal alone would generate revenue increases of nearly 100% over 2006 ($3.9Mil), the longer-term potential here may actually outweigh the near-term reward.

Just the Tip of the Iceberg

As many Tier-one suppliers strive to perfect their offerings, EAGB is already inking and delivering on multi-million dollar contracts with hospitality technology leaders. These companies’ posses the hospitality clientele that can likely make a six million dollar deal seem like a drop in the bucket.

In a previous edition we hypothesized that EAGB could set itself up for a very lucrative future if the company is able to deliver on this initial contract - which it seems to be doing to a T.

By our estimates (assuming that the unnamed partner has 505,000 hotel rooms and EAGB charges an ASP of $500 for its set-top boxes) it is feasible to assume Eagle experiencing the following incremental revenue increases at specific penetration rates:

5% penetration = $12,600,000

10% penetration = $25,300,000

15% penetration = $37,900,000

* Please remember that these figures are only estimates and represent only potential revenues derived as a result of a strengthened relationship with Eagle Broadband’s unnamed customer in today’s news and do not take into consideration the growth and financial performance of: the company as a whole, EAG’s overall IPTV business, SatMax business, IT Services Division, or other products/divisions.

Management’s take:
“This is the second order from this key hospitality contract and we anticipate our relationship with this partner will intensify over time as they accelerate their roll-out of our boxes within the hotels they serve. They are a leader in the hospitality industry and this additional order shows they continue to be impressed with our technology,” said David Micek, president and CEO of Eagle Broadband. "We developed the IP3000HD to meet the needs and growing demand from hospitality operators for a quality IPTV set-top box with specific features at a very cost-effective price point and we are thrilled the market, and this customer in particular, is responding so positively”

In a bit over a month, Eagle Broadband Inc. has made moves that could boost 2007 revenue into the $9-$10 million range and pave the way for exponential growth in 2008 and beyond.

At a price of $.11, we see a tremendous opportunity here – especially since the company’s other two business segments, SatMax® and IT Services are performing better than ever. Where else can you find value like this south of a quarter?