The seal of approval translated into a gain of almost 15 percent for Com21's stock, which closed at 29. Today's gain follows a 22 percent rise yesterday on news that Com21's cable modems were now certified by industry consortium CableLabs, meaning that they can "talk" to equipment made by rival manufacturers.
Although cable companies continued to buy older proprietary cable modems from Com21 during the year to go with their existing systems, many balked at buying equipment for use in new cable modem deployments that wasn't certified. The first wave of products were certified in March, and when Com21 wasn't on the list then or in June, the company endured strong hits against its share price.
For consumers, having a certified, standards-based modem means the device could be used with any service provider's equipment. Currently, most cable modems are leased to consumers or purchased directly from the cable operator and only used with that service provider, a frustrating procedure for many.
Eventually, cable operators want consumers to buy the cable modems, just like today how they buy a dial-up modem. For them, standards-based modems mean they can provide high-speed Internet access with lower service and equipment costs. With lower service cost, the reasoning goes, consumers will flock to their flavor of broadband Internet service.
Com21 lost out on some early sales of new-style certified modems but should be able to make up for lost time.
"Com21 has existing relationships with AT&T, Charter Communications, Cox and others, so I would not be surprised if they wind up showing up on the short list for new purchases," from those companies, said Michael Harris, president of Kinetic Strategies, a consultancy.
Harris said sales of existing equipment lines remained strong throughout the year, and now sales of the new-style modems should be up sharply. Already, the company has an order from Videotron, Canada's largest cable operator.
"We are obviously pleased to be recognized as a CableLabs certified vendor," said Com21 chief executive Peter Fenner in a statement. "The certification tests are difficult and exacting, and we commend CableLabs for their continued efforts to maintain high standards in the cable modem industry."
Com21's share price has risen over 118 percent this month alone. The stock is now approaching its 52-week high of 37.5.