Ottawa’s Bridgewater Systems Corp. cheered markets Thursday by announcing a $56-million (U.S.) service contract with Verizon Communications Inc., the largest wireless carrier in the United States.
The deal by the software firm, which comes after it lost a huge contract in October with Alcatel-Lucent, , bounced Bridgewater’s stock up nearly a dollar on Thursday before it closed at $7.88 a share.
Bridgewater is one of many companies helping large wireless carriers manage increasingly complicated traffic on vast networks in an era when customers use phones less for making simple calls than they do for Tweeting, Web browsing and running complicated applications. Companies such as Bridgewater – along with Waterloo, Ont.-based Sandvine Corp. and Redknee Solutions Inc. in Toronto – help carriers identify and authenticate users, allocate traffic as efficiently as possible among cellular towers, and then turn all those millions of intricate processes into incremental revenue
“The more devices you have on the network, the more devices you need to authenticate,” Ed Ogonek, Bridgewater’s president and chief executive officer, said in an interview. The deal with Verizon, he added, “represents the growth they see in their mobile data service offerings and the requirements that places on their network.”
Kris Thompson, an analyst at National Bank Financial Inc. who follows small mobile communications companies like Ottawa-based DragonWave Inc., said frequent changes in how Bridgewater received revenue from Verizon were “lumpy,” leading to unpredictable revenue flows from one of the company’s biggest buyers – and uncertainty.
“The stock’s been held back until this announcement,” said Mr. Thompson, who believes the stock is undervalued. “There’s clarification now.”