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A Tech stock actually worth owning

Bob Moriarty
October 1, 2003

As 321gold readers know, I virtually never mention any stocks other than resource stocks. The sole exception may have been last October when I saw a temporary bottom in the stock market and mentioned that NT was cheap at $.50. For those who care, Nortel is now $4.26 and not nearly as cheap as it was 11 months ago.

But a tech. company came to me recently and wanted to sign up for advertising. It's a Canadian Wireless company, Wireless Age Communications (WLSA, OTCBB $2.25 US) with an interesting slant. The company head, John Simmonds, has been THE leader in Canadian telecommunications for the last 20 years and he's about to hit another home run. I found some interesting information about Simmonds and
Wireless Age.

John Simmonds began his first company, Midland Canada, in 1978. In eight short years, he went to $20 million in annual revenue. In 1981, he began a long career of buying low cost acquisitions and building them up for later resale. He purchased Dynacharge out of bankruptcy for $100,000 and sold it four years later for $10 million. Without being negative, John Simmonds is a wheeler-dealer and a very good one indeed.

In 1987, John took over Glenayre, a mid-level mobile communications business doing $40 million in sales. Through a series of strategic acquisitions, Simmonds increased revenue to over $400 million in 18 months.
Mr Simmonds went on to spin the US subsidiary of Glenayre off under its own IPO and the company reached a market cap of $3 billion US in less than five years. In 1992 and 1993, Glenayre was the biggest gainer on the Nasdaq as the stock roared from $14 a share to $700 (split-adjusted).

In 1994, Simmonds bought Intec at $.44 a share. When he sold the company two years later, shareholders got $12, a gain of 2600%.

The wireless industry in Canada is essentially fragmented into small and inefficient units. Simmonds intends to consolidate these smaller companies into a much larger integrated company providing high margin hardware solutions to wireless customers.

Wireless Age buys companies on the basis of high margins, a positive cash flow and a strong base of residual payments from wireless phone companies. They can be very selective in their purchases so they can constantly be increasing efficiencies and profits by "rolling up" a fragmented industry.

As a result of a US FCC change in frequency spacing in 2-way radios, anyone using 2-way radio in the US and Canada will need to upgrade their systems in the next three years. Wireless Age intends to use the Midland brand name to sell a variety of proprietary products which will comply with the new regulations. Manufacturing and distribution agreements are already in place.

The company has 17 million shares outstanding and only 3 million in the float. Volume on the stock is fair and increasing daily.

I rarely put a target price on a stock but since this is a tech stock, which I would normally shun like sin, Wireless Age is an easy 3-5 bagger in any market. It has a solid business plan, top notch management and a high growth market regardless of economic climate.

This is neither a buy nor sell recommendation, we have not been paid to produce this piece. We don't own the stock but we might buy some - and they do advertise with us.

Bob Moriarty
October 1, 2003

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