Sunday, March 06, 2011

The Wireless Wonder...A 100 Bagger?

Years ago we identified the trend of mobile phones and barcodes connecting the physical world to the Net.

Another major trend is starting to take develop and we have discovered the company that owns the intellectual property that makes it happen.

This technology was found using the BigStockular (tool highlighted in the BigStock Book.

The are approximately 5 billion mobile phones in use today worldwide. As more phones become "smart" they will tax the current cell network's ability to provide a constant contact regardless of data size or location. There is one method that carriers are starting to implement and it utilizes an explosion of new mini "cell towers". One company has the technology and intellectual property that enables these new "cell towers" to be be utilized.

 Calypso Wireless  (CLYW)

This is a company we have been invested in since 2004. We knew the story could be very big one day. It appears the time is getting close. This is as high risk as they come, but the rewards could be life changing.

I am sure you know how valuable "handing off" a cell call is. When you're traveling your call is passed off to another cell tower so the call isn't dropped. The cell uses the same frequency as it is passed along to each tower.

The holy grail of mobile communications is maintaining a connection regardless of data size or location.

That will require a cell phone to automatically look for different frequencies to switch to when original signal is getting weak.

The proliferation of wifi hotspots have essentially created endless "cell towers" but they operate at a different frequency than a cell tower.

These multiplying "cell towers" are being used to "hand off" a cell call saving carriers a boatload of money (no need to buy/lease more cell towers and/or buy spectrum).

The ability to switch between cell tower and wi-fi (without user having to do anything) is the next big thing for mobile.

Calypso Wireless (CLYW) has the patent covering auto switching with cell, satellite and wifi any two different frequencies.

U.S. Patent 6,680,923
Calypso Wireless' patented ASNAP(TM) technology enables the seamless roaming of voice, video and data between Wide Area Network access points, such as cellular towers and short-range Internet access points (such as Wi-Fi, Bluetooth, etc).

ASNAP(TM) also enables greatly enhanced services such as broadband connectivity, real time two way video conferencing, VoIP and network-based gaming applications via Calypso's cellular phones, PDA's or any mobile device powered with ASNAP(TM).

ASNAP (white paper)

In addition, but not limited to the ASNAP(TM) patent, Calypso's holds the patent to the incredible technology which enables cellular phones and PDAs to convert any incoming text message to voice message and vice versa.

ASNAP (Automatic Switching of Network Access Points) represents the holy grail of mobile communications, which is the seamless switching between unlicensed and licensed spectrums with no interruption to service.

Calypso Wireless is marketing and licensing its proprietary switching technology. This proprietary technology is the convergence of Cellular and Wi-Fi networks, which will make it possible for wireless users to roam between their Wi-Fi zones and their mobile phone carrier networks, in a seamless manner.

All companies that produce as well as utilize the infringed technology can be sued for patent infringement.

What this means is the makers of wireless routers, cell phone makers and other equipment that operates with auto-switching capability, as well as providers of service (ATT, Verizon, T-Mobile, and others) that allow this capability, could be sued for patent infringement.

Making VOIP calls over Wifi does not present a problem with the ASNAP patents. The patents cover the switching from cell tower to wifi (and satellite to wifi). It is the "handing off" to another frequency that their IP covers.

What does it mean?

Potentially billions in licensing revenue.

Licensed wireless spectrum is sold at a premium to wireless carriers. Unlicensed spectrum like WiFi and bluetooth, is free to use and anyone can use it. Cell towers are notoriously expensive to lease and maintain.

T-mobile is positioning themselves uniquely in the industry by augmenting their cellular offering with wifi support for calling. Once they secure a license to the ASNAP patent it will be a few software changes to the Android wifi calling product to make it seamless. They will be first to market amount US carriers if they can wrap this lawsuit up and get it out there onto an already exploding Android platform.

In a single Android device you could have cellular, satellite, and wifi and wherever you are your device could switch to the most cost effective transport. Most devices on the market now support all this in terms of hardware. The software is the key and Calypso has the patent.

If you want to see how big this technology is, just Google "UMA unlicensed mobile access" or "switch from cell tower to wifi". Plenty of credible techies feel this technology is worth billions.

Our quick summary on CLYW. (Please Read)

The company has no money just a couple patents (approved in all of Europe and Mexico).

Calypso initially went the route of building phones with ASNAP technology and demoed to a number of carriers. One was T-Mobile.

They soon realized (just like Qualcomm) it is MUCH cheaper just to license the technology.

They have stayed out of the public's eye on purpose. While they were busy getting their house in order, they watched as carriers started to implement UMA.

The stock trades on the pink sheets (grey sheets) (yuck). There are NO current financials. They haven't issued a press release in months. This stock is as ugly as they come. Wall St has both forgotten about it or just written it off.

According to their last financial statement they had 197m shares outstanding giving it a market cap of approximately $16m ($8m) With that valuation and a win in court, we feel this stock could very well be a 10 Bagger, if not a 100 Bagger.

An upcoming court case In Texas (which is too long to explain), will determine Calypso's financial obligations and percentage ownership of the patent. This case is expected to begin in June 2011 and should last 4-5 days.
(case was settled in August 2011)

To follow the analysis of the court case there are some pretty smart legal minds on this message board. There is plenty of info on the T-Mobile settlement negotiations too.

Let us stress this is a VERY RISKY stock but if Calypso Wireless prevails in court, it could be life changing. DO NOT INVEST any more than you can afford to lose.

The information contained herein has been compiled from sources deemed reliable and it is accurate to the best of our knowledge and belief; however, we cannot guarantee as to its accuracy, completeness and validity and cannot be held liable for any errors or omissions. All information contained herein should be independently verified and confirmed.

We do not accept any liability for any loss or damage whatsoever caused in reliance upon such information or services. Furthermore, we are not an investment adviser nor a financial adviser, and no information provided here is to be interpreted as a suggestion to buy or sell securities. We have not been compensated in any manner for this summary. We may hold a position in this security and WILL NOT alert publicly if and when we decide to sell our holdings. We may or may not update our opinions and research of this security.

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