DragonWave Inc. Chief Executive Officer Peter Allen said he’s confident the Canadian wireless equipment maker has a good chance to win business from the largest U.S. mobile-phone companies this year.

Verizon Wireless and AT&T Inc. are planning upgrades to accommodate data-hungry smartphones and other portable devices. DragonWave is talking to the carriers about providing them with microwave radio products that link transmission towers to their ground networks.

“This is the battleground for the next generation of mobile-data subscribers,” Allen said in an interview yesterday in Toronto. DragonWave has an edge as “the middleweight champion of the world,” he said.

DragonWave, which surged 12-fold last year, earned that belt on demand for its products from Clearwire Corp., which is building a fourth-generation, or 4G, U.S. wireless network. Clearwire accounted for about 82 percent of Ottawa-based DragonWave’s sales last quarter. The global market for microwave equipment was about $5.9 billion in 2009, according to Campbell, California-based Infonetics Research. Verizon Wireless, based in Basking Ridge, New Jersey, and Dallas-based AT&T may choose a supplier in the first half, Allen said.

“We come at it with the confidence of being a market-share leader but we come at it with no complacency,” he said. “We’re now fighting in the heavyweight ring.”

Mark Siegel, a spokesman for AT&T, said the company doesn’t comment on negotiations. Jim Gerace, a spokesman for Verizon Wireless, didn’t immediately return a call for comment.

DragonWave rose 35 cents to C$13.49 at 2:22 p.m. New York time in Toronto Stock Exchange trading. The stock soared last year, climbing to C$12.02 from 96 cents.

Competitors

Apple Inc.’s sought-after iPhone, which is sold exclusively through AT&T in the U.S., consumes seven times the bandwidth of typical mobile phones, according to Sanford C. Bernstein & Co. in New York.

“Verizon and AT&T will need wireless” gear, said Ilya Grozovsky, an analyst at Morgan Joseph & Co. in New York. “The same process that led Clearwire to DragonWave could also lead them to DragonWave, but it will be a very competitive space.”

Equipment makers Harris Stratex Networks Inc. and Ceragon Networks Ltd. also may be bidding, said Grozovsky, who recommends investors buy the stock and doesn’t own any himself.

Harris Stratex continues to target new business with major carriers, said Cynthia Johnson, a spokeswoman for the Morrisville, North Carolina-based company. Yoel Knoll, a spokesman for Tel Aviv-based Ceragon, declined to comment.

Revenue Gains

DragonWave’s revenue in the three months ended Nov. 30 climbed more than fivefold to C$55.8 million ($53.6 million) from a year earlier. Per-share earnings beat analysts’ estimates.

 While sales from customers other than Clearwire increased 25 percent last quarter, DragonWave will “see some erosion in market share” from its biggest customer as Clearwire diversifies its suppliers, Allen said.

“It’s going to be tough for an upstart, but the Street is making a bet that they will win more business,” said Kevin Dede, an analyst at Jesup & Lamont in San Francisco. He has a “hold” rating on the stock and doesn’t own it.

Source:BusinessWeek