Eagle Broadband: Business Fundamentals Improving. Revs booked in '07 Could Shake Monkey of Their Back
 Eagle Broadband Inc. (OTCBB: EAGB) recently announced financial results and briefed the investment community on plans to expand IT Services Sattellite Group operations in Dallas, TX. Although Eagle took a body blow in regards to its net loss from operations of $7.3M, the company seems to be shaking it off and pushing forward with improved margins, cutting gross margin loss nearly in half (-18%) for the Q on a YoY basis. Here's a quick look a some recent developments at EAGB and their potential impact on future profitability: 1. Eagle's leading hospitality customer has ordered $6.4 million worth IPTV set-top boxes; 2. OEN has agreed to pay Eagle $1.9 million for a portion of its fiber network over a period of 13 months with a clause for an additional $800,000 if OEN is purchased by a third party or sells the network to a third party; and 3. The IT Services Satellite Group exceeded expected revenue (>$525K) in its first three months and is now expanding in Dallas - a hotbed for high-tech services over the past two decades.
(Source: Federal Reserve Bank of Dallas)
 4. Eagle is targeting the emerging (expected to hit $40 billion by 2010, with 50 million subscribers by 2009) IPTV market with what has proven to be, believe it or not, an industry leading solution. In the past few months, EAGB has entered into relationships with: a. InfoValue Computing, Inc. (InfoValue), an expert in high-performance video streaming that got Eagle's IPTV top-boxes implemented in what the co. describes as "the world's largest hospitality HD deployment" at the opening of the Ritzy Wynn Hotel & Casino in Las Vegas; and b. SecureNet, LLC - EAGB's 3rd IPTVComplete(TM) customer. Also a provider of High Speed Internet and IP telephone services that when combined with Eagle's IPTV solution, provides a triple-play of IP services designed for the exclusive residential market in the San Francisco Bay Area.
That adds up to quantifiable, potential incremental revenue increases exceeding $7.8M if all goes well, in addition to a number of unquantifiable prospects that could translate into some major sales volume with one big deployment. That would, in theory, take care of the $7.3M net loss from ops reported in Q3 '07. I'm not saying that this is what's going to happen, but if EAGB does follow through with plans and continues to improve margins, a price of less than $.05 could represent an attractive, relatively low, entry point to consider. Labels: AMEX: EAG, EAGB, Eagle Broadband, Eagle Broadband Inc.
The Revolution will be televised
 As the Internet Protocol Television (IPTV) market gains steam, particularly within the hospitality sector - Eagle Broadband Inc. (OTCBB: EAGB) is quickly establishing itself as a leading player. Very impressive since the IPTV market is expected to reach $40 billion by 2010, with 50 million subscribers by 2009.
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”
Net-Net 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? Labels: EAGB, Eagle Broadband, Eagle Broadband Inc.
Three Successes Are Better Than One
 In this economical climate, it is anyone's guess what the next big demand will be. Oil prices go up and energy and alternative energy companies step into the lime light. A terrorist attack drives security device companies through the roof. Oprah makes a random statement and sales either plummet or surge. The fact is, any number of things can mean either being in the right place at the right time or missing the boat.
From a managerial standpoint, it is best to take stock of the current economical climate and speculate future demand. From an investment standpoint, it is best to take stock of the current economical climate and speculate future demand. I have seen some of the most ingenious products flounder because their timing was off. But really, there is no way to perfectly predict a winner every time. However. . .you could hedge your bet.
One Trick Pony? I Think Not In addition to a thriving IPTV business; Eagle Broadband Inc. (OTCBB: EAGB) benefits greatly from having two additional business segments experiencing historical growth. Any Joe Schmo can tell you - It is always better to be pursuing more than one potentially explosive market! Eagle's IT Services Division recently shattered May revenue expectations by 80% following the acquisition of Alliance Maintenance & Services Inc.'s commercial satellite division. The division also just inked a $500,000 deal with Sprint/Nextel - marking phase one of a multi-million dollar program.
If that wasn't enough - the company's SatMAX® emergency communications systems (classified within the IT Services Division) are gaining unprecedented levels of traction throughout North America. The products are so effective in fact; they are now used by the U.S. Government in classified programs. Furthermore, distribution just went international, opening the door to a vastly enhanced target customer base.
Saving $ While Making $ EAGB is also making moves to become more operationally efficient - opting to sell off a portion of its fiber network deemed not core to key operations for nearly $2 million. This decision was crucial, not only because of the money, but also because it allows the company to focus on what it does best.
We like to see companies re-evaluating, consolidating and eliminating what in their business is not producing at full tilt. This kind of continued focus is encouraging to us, not only because it means that management is keeping a tight bottom line but also because it shows the company's diversification is not spreading their resources too thin.
Helping Those In Need News out of Eagle today highlights a SatMAX Emergency Communications Systems (ECS) sale to a non-profit organization in Texas. From what I've read, the entity provides services to the mentally disabled and their families. When you design your product for use in mission critical, life or death situations, and demand ends up trickling down into the mental health arena - I'd say it's a win-win. It looks like Eagle shares my sentiment.
"We are thrilled to be helping out a caring organization like this with our SatMAX ECS unit," said Dave Micek, president and CEO of Eagle Broadband. "It is nice to have a technology that can be used in many facets of communication. Although the SatMAX technology was developed to be used for emergency communications by first responders in times of severe crisis, it is gratifying to see it gaining wider acceptance in corporate and non-profit organizations as well."
Perfect Storm for SatMAX Sales? With hurricane season under way, EAGB is well-equipped with enough SatMAX units to meet what could be extremely high demand. According to a release a few weeks back out of Eagle, The National Hurricane Center outlook indicates a 75% chance of an above normal hurricane season. Curious about what Eagle's SatMAX systems are all about? Check this out: SatMAX SystemsAt a price of $.14, we see tremendous potential for future growth here. Where else can you find a company housing three burgeoning businesses under one roof, priced way under a quarter? Think about that. Labels: EAGB, Eagle Broadband, Eagle Broadband Inc.
IPTV Customer #3 For EAGB
 EAGB announced today that they have signed up yet another IPTV customer, SecureNet, an IP telephone and Hi-speed Internet player in the San Francisco Bay Area. The company continues to capitalize on its ability to help Telecom providers fortify their offering and come to market with a triple play solution (phone, cable, Internet). "We are excited to team up with Eagle because of the benefits their IPTV offering provides to Triple-Play subscribers. Eagle's IPTVComplete(TM) when combined with Fiber-to-the-Home IP services will allow us to deliver next generation services that leapfrog the competition. For instance, when Eagle's set-top box browser utilizes SecureNet's closed fiber network, the customer can download and display Internet content directly to their big screen HDTV. Features like this give us a distinct advantage that will enable us to quickly capture thousands of subscribers in the San Francisco market," said Derwin Cox, Founder and President of SecureNet. Judging by the recent flow of news out of Eagle, the new focus on IPTV is starting to grow some legs. As the IPTV market matures and the company remains and early player and thought leader, EAGB is well-poised for some sizable gains if they can stay on task. Labels: EAGB, Eagle Broadband, Eagle Broadband Inc.
Eagle Nests a Potential $2.7 Mil in Beneficial Fiber Network Sale
It looks like it wasn't just me that realized Eagle Broadband was pretty slick in its decision to sell off a portion of its fiber network for $1.9 mil over 13 months (and another potential $800K if the network falls into another entity's hands). The market has responded OK thus far today. Those somewhat unfamiliar with EAGB may have questioned this move. At first glance it appears that the company sold off a portion of its business to another organization most likely competing for customers in the same relative region. Admitting defeat? I think not. More like correctly choosing your battles.Eagle has no desire to become a Triple-Play provider (telephone, Internet, cable) and go head-to-head with the likes of Verizon and Time Warner in targeting individual consumer homes. No objections there! EAGB is now targeting the high growth potential Internet Protocol Television (IPTV) market with a strict focus on other very high-growth areas such as Multiple Dwelling Units ( MDUs) and the hospitality industry. Good luck OEN (the purchaser of EAGB's network) I'll put my money on the fact that this move was very positive for Eagle's future. The company will now be able to place more focus on its IPTV business and will have additional cash inflow of $1.9 mil over more or less the next year to make advances in that respect. Much better than battling it out for customers in a segment that may have been washed out over time anyways, likely not for a profit of $2+ million. Labels: EAGB, Eagle Broadband, Eagle Broadband Inc.
Eagle Broadband Exceeds Expected Revenue By 80%
I always love when one of the companies we follow makes alliances with well known names. Take a little company, Eagle Broadband for instance, that has a strong business plan, good management and a cutting edge product and you have one of the many companies out there trying to forge ahead in a competitive marketplace. BUT take that same little company and announce that they are providing services to Yum Foods, Taco Bell and Kentucky Fried Chicken and suddenly I have your attention. Doesn’t sound like such a little company anymore, does it? That is how we feel about Eagle. With today’s Press Release that Eagle Broadband Inc's (OTCBB: EAGB) IT Services Division exceeded their monthly projected earnings by 80% - meeting a whopping $178,000 - our faith in this little powerhouse is only renewed. While EAGB has floundered in the market recently, it has flourished in its key markets – announcing (almost monthly) new contracts and financial milestones. Our favorite attribute of this “little” company is its sheer tenacity. While the industry may be a little less exciting than making toothbrushes, the product is meeting a rapidly budding demand and continues to forge ahead like a market leader. In all fairness, sometimes the market confounds us. Every day, we see great opportunities that peter out because of low market participation. The biggest hurdle in being a company like EAGB is getting people to notice you, then invest in your success. Despite our most sincere efforts, we are not psychics. All we can do is search the market for companies we think are worth owning long-term (like Eagle) and let you take it from there. Labels: EAGB
Eagle Broadband: In the Drivers Seat
After taking a long, hard look at Eagle Broadband's (OTCPK: EAGB) much anticipated 10Q filing and speaking with CEO Dave Micek, we are pretty darn excited about what the future holds for the company. As analysts predict an upcoming surge in Internet Protocol Television (IPTV), EAGB is attracting some of the industry's biggest deals, shaving off costs at a record clip (1st half fiscal '07 operating expenses down more than $1.75 mil vs. 1st half of '06), and from an operational standpoint, simply becoming far more efficient than ever before. Just in time for the inception of a video revolution! Don't get us wrong, IPTV growth alone could easily propel EAGB to unprecedented levels in regards to both corporate growth and value in the equity markets. The IPTV market IS expected to reach $40 billion by 2010, with 50 million subscribers by 2009. However, the company continues to generate a significant source of income through synergistic, yet separate, business segments (IT services and satellite communications). When attempting to gauge EAGB's near term market opportunity in the IPTV space, its helps to envision Internet Protocol Television as a racecar. Having a competitive, not to mention champion, car requires a ton of work in many respects (parts, expert engineering, maintenance, etc.). Oddly enough, many U.S. Triple Play (cable, internet, television) providers or prospective triple play providers are finding themselves in the same boat as prospective race car owners. Sure, you can hit AutoZone® and buy most of the pieces required to put the car together, but do you posses the knowledge, experience, patience, and time required to perfectly engineer the automobile and ensure that it can hold its own on the Formula One circuit? Well, if you're a company historically entrenched in the cable industry, this could be like Boeing attempting to snag market share away from Ferrari.This is where EAGB is poised to make a killing. By offering the "whole schebang", or more properly put, a complete IPTV solution including: hardware, software, signal encryption, system architecture/installation, and 24/7 monitoring, EAGB has attracted some huge contracts and has established itself as a very attractive choice for media providers of every tier. While IPTV remains a concept in the heads of many, EAGB should be in no way associated with a "concept" company. EAGB logs real revenues (Q2 fiscal '07 revs are up 13% over the same period of fiscal '06) and maintains real customers. Check this out! . . . Eagle Broadband Livehttp://nocipcamera1.eaglebroadband.com/view/view.shtml?imagePath=/mjpg/video.mjpg&size=1This is a live link to one of the company's head-ends in Texas. Although this particular command center is not currently serving IPTV customers (that head-end is in Miami), the link above exhibits the company's 24/7 monitoring capabilities, already solid infrastructure, and established customer base (green boxes on the hard to read screens represent customers in a certain area). Although small in stature, Eagle Broadband sure packs a punch. With the company's 10K filed, it should only be a matter of days before EAGB soars again, this time on the OTC Bulletin Board. As far as other progress is concerned, a quick peek at corporate news dated 4/23/07 provides an excellent snapshot of the what company has been up to over the past six months. Here are a few highlights: Signed a contract with FrontGate Broadband to deliver IPTVComplete(TM) in Florida
Shipped 500 units of Eagle's newest set- top box, the MediaPro IP3000HD, to a leading hospitality solutions provider
Signed a contract with the same hospitality solutions provider under which Eagle could ship more than $6 million in set-top boxes over a 13- month period if delivered according to the customer's service schedule
Acquired the customer base of Connex Services, Inc., a Houston-based IT services company
Appointed Tony Cordaro, the former president and CEO of Connex, as vice president of IT Services, and Kane Brushwood, a former Connex executive, as a director of IT Services
Secured a satellite communications system contract with Fort Bend County, Texas, to provide a portable SatMAX® Emergency Communications System and pre-wire the County's emergency operations center
Received a patent on our advanced set- top box technology that ensures secure delivery of digital television content
Received a series of contracts and completed installations of VoIP office support systems at five regional hurricane-recovery program offices for a world-renowned international disaster-relief organization
With ANEW Broadband, launched a joint collaboration of ANEW Vision; a triple-play service offering, specifically designed for multi-dwelling buildings.
As many of the telecom "big dogs" scurry to perfect their respective pieces of the IPTV puzzle, Eagle Broadband is already there with a complete solution as demand ramps up. The company's margins are improving and it is attracting increasingly larger contracts while maintaining leadership position in the IPTV space which is poised for monumental growth in the near- term. EAGB is a front runner in an exciting new industry space with a very bright future. Get off the sidelines and get in while the opportunity is undervalued. EAGB has big things ahead of it. This will be a good one for the long term portfolio. As always, do your due diligence and happy trading!Labels: EAG, EAGB, Eagle Broadband, IPTV
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Eagle Broadband Inc. (OTCBB: EAGB) recently announced financial results and briefed the investment community on plans to expand IT Services Sattellite Group operations in Dallas, TX.
4. Eagle is targeting the emerging (expected to hit $40 billion by 2010, with 50 million subscribers by 2009) IPTV market with what has proven to be, believe it or not, an industry leading solution. In the past few months, EAGB has entered into relationships with:
