Wi-Fi is a great thing as long as you have immediate and easy
access to the signal and don't find yourself chasing it around
the room just to stay connected.
The problem is many Wi-Fi signals are weak. They can get
blocked or redirected, or they lack the capacity to support
Ruckus Wireless (
) is working to change that.
The company makes advanced wireless systems for the mobile
Internet infrastructure market. It provides indoor and outdoor
"smart Wi-Fi" products designed to get more speed, capacity and
reliability out of 802.11 standards.
Ruckus' technology addresses Wi-Fi capacity and coverage
problems caused by the ever-increasing amount of traffic and
noise or interference on wireless networks, mainly due to a rise
in the use of smartphones and tablets.
The company boasts more than 40,000 end customers worldwide,
ranging from mobile carriers and broadband service providers to
hotels, schools, hospitals, sports arenas and warehouses.
Its gear is in high demand amid a corresponding boom in demand
for more and better Wi-Fi technology.
"Because of the smartphone phenomenon, data capacity keeps
expanding, and Wi-Fi has become the de facto way users want to
connect," said David Callisch, Ruckus' vice president of
corporate marketing. "Our innovations transform Wi-Fi into more
of a wirelike experience in terms of reliability."
It does so by providing a stronger, more direct signal for
users, Callisch told IBD. That's important because so many
different factors can disrupt a signal.
"If you are in a warehouse, for example, every time something
changes or moves, the Wi-Fi environment changes," Callisch said.
"If you have 50 different access points, you can't go changing
all the antennas at once."
Ruckus' technology creates a "dynamic" antenna that moves the
Wi-Fi signal around the same way a lighthouse moves its beam, he
says. "Because it is focused, the signal is inherently stronger,
so users get higher data rates."
Many of Ruckus' customers are small and midsize enterprises
that want to deliver better Wi-Fi services to staff and
"Their antenna technology is far superior because it works in
high-density environments like hotels and factories. Factories
have a lot of cement, and hotels have a lot of walls, and you
need a strong signal for Wi-Fi to work effectively," said
Catharine Trebnick, analyst at Dougherty, an investment bank and
Ruckus' customers also include service providers, such as
telecoms and cable companies, that want to gain more business by
providing better Wi-Fi services to customers.
"Cable operators are using our Wi-Fi technology to enable them
to reduce churn with subscribers," Seamus Hennessy, Ruckus' chief
financial officer, told IBD. "Ruckus is benefiting because our
core technology lets the network operate almost like a
A Top Provider
Ruckus' main competition in the service provider market comes
fromCisco Systems (
). The two have traded positions at the top of the market over
the past few years, Hennessy says.
On the enterprise side, Ruckus ranks No. 3 behind Cisco
andAruba Networks (
Enterprise customers that Ruckus has scored recent wins with
include the city of San Francisco, the Compton, Calif., school
district and the Mandarin Oriental hotel chain.
On the service provider side, Ruckus has inked deals with
large carriers such as Telefonica in the U.K.,Time Warner Cable (
) in the U.S., Vodafone New Zealand and Singtel in Singapore.
Apple Watch, Google Fiber
Ruckus is expected to land more business as new products such
as smartwatches grow in popularity.
) and Samsung have launched mobile watches, and that's going to
require even more Wi-Fi," analyst Trebnick told IBD. "Wi-Fi is
becoming ubiquitous, so that's the driver that's not going to
ever go away."
She says Ruckus also stands to benefit fromGoogle 's (GOOGL)
fiber-optics network, which got started around Kansas City, Kan.,
and has expanded into Provo, Utah, and Austin, Texas. Google is
expected to roll out the Google Fiber fast-broadband service into
more than 30 U.S. cities as well as other countries.
Among the customers that Google wants to target with the
network are small to midsize businesses, Trebnick says.
"It hasn't been confirmed, but everybody believes Ruckus will
be one of the primary suppliers of Wi-Fi when Google does this,"
Ruckus executives wouldn't comment on the Google Fiber
For now, the company has plenty of business to keep it
occupied. Ruckus was founded in 2004 and had its
initial public offering
in November 2012. It has been profitable since 2009 and expects
to keep growing those profits in coming quarters and years.
"We've made significant investments in R&D over last few
years, and we're now at a position where revenue is growing
faster than R&D spending," Hennessy said. "We have also
achieved operating efficiencies that led to higher gross
Ruckus logged second-quarter gross margin of 70%, up from
67.4% the prior year and above Trebnick's estimate of 68.5%.
Earnings climbed 83% to 11 cents a share, topping the consensus
view of analysts. Revenue gained 26.8% to $81 million, also above
Analysts polled by Thomson Reuters expect full-year profit of
40 cents a share, more than double the previous year's earnings.
EPS for 2015 is seen rising 45% to 58 cents.
"We are in a significant growth cycle for Wi-Fi over the next
couple of years because of the proliferation of devices,"
Hennessy said. "We feel we are in a good position to take
advantage of that because of our technology."
Ruckus stock has risen more than 60% since mid-May and
currently trades near 15.