We just learned Eagle Broadband (AMEX: EAG) has acquired Connex Services’ customer base, which is expected to add about 50 I.T. clients to Eagle’s current base, as well as push I.T. revenue up by about $600,000. It’s a good fit, as Connex offers something along the same lines as Eagle…..management of broadband-based data, voice, and video services.

Anything to boost revenues is good - even if it’s a modest $600,000. However, it appears as if Eagle CEO Dave Wicek sees the same bigger picture we do. In our opinion, the ‘first’ customer is usually the toughest to get. Every one after that seems to be easier to get on board. So, the current Connex customer base can also act as a springboard to introduce other services Eagle provides. We think the company should be able to take this relatively small foothold and expand its footprint by quite a bit.

The deal is doesn’t require Eagle to assume any of Connex’s debt. Instead, Eagle will be issuing about 1.2 million unregistered EAG shares to Connex.

For more details, click here.

Maybe you already heard, or maybe not, but Eagle Broadband (AMEX: EAG) received an official notice from the American Stock Exchange - where Eagle’s shares are publicly traded - that the company may not fully meet all if their listing requirements. Specifically, the AMEX notice to Eagle states that shareholder equity and continuing losses from operations fall short of the exchange’s standards….as of right now.

As you might imagine, this announcement made on December 5th pulled shares lower on the 6th, and they’ve been selling off ever since.

While investor’s concerns are understandable, we also think it maybe a case where the market reacted quickly without really absorbing all the details they may want or need to. Having had some time to review all the news and digest, here’s our take….

No, we don’t necessarily think this is good news…..because it’s not exactly news at all (meaning it’s not exactly bad news higher). The satisfaction of the AMEX’s requirements have been in question for a while - it’s simply that the official August 31st year-end filing had to be reviewed by the AMEX before the official notice could be delivered. So, it seems as if the panic selling may have been from those owners who didn’t fully know Eagle’s story. Fine. Now that they’re getting out of the way, the more serious investors may be able to scoop up shares at a lower trading level.

The other key reality we see is simply the ‘current’ Eagle is not the ‘old’ Eagle those past filings represent. Remember, we think Eagle is likely to become a major IPTV player just as the company describes, but that enterprise was only started in October. Given enough time, we think Eagle may well indeed meet the AMEX’s requirements using IPTV as the revenue vehicle…..which was not in place last fiscal year.

Plus, we don’t think other investors read the news too closely. The American Stock Exchange never said EAG shares were getting de-listed. The exchange said they might get de-listed if certain requirements continue to go unmet. Any de-listing wouldn’t take place until May 29th of 2008. So, there’s a pretty big window there for Eagle to get things pointed in the right direction….which we feel they’re certainly capable of. As mentioned in the title, Eagle will be submitting a plan to the AMEX about how they’ll go about meeting those specific AMEX standards in the future. For the time being, an acceptable plan of action will keep Eagle in good standing with the exchange, as long as the company does indeed proceed according to that plan.

Ultimately, yeah, we - and probably any shareholders - would have rather not had to contend with some rough publicity. However, we think a little perspective is on order on the matter. From our point of view, Eagle is still a viable opportunity, regardless of where it’s listed. In the meantime, the AMEX listing is still likely to be in place for at least another 18 months. We think that’s more than ample to time for the company to prove itself.  

Now, with all that being said, don’t forget the timing of any stock purchase can still be critical. The way we see it, trying to find a precise chart bottom is a little like trying to catch a falling knife….it can be dangerous. In fact, our prior suggested stop of $0.49 on EAG shares was violated on the 6th. So, we’re not necessarily saying now or here is the optimal time to jump in. We do feel, though, this stock is worth watching, as nothing has fundamentally changed from what we knew before the announcement was made. We’ll keep an eye on the stock, and maybe re-issue a target and stop if we see something significant change with the chart.

Be sure to listen in on Eagle Broadband’s (OTCBB: EAG) conference call this Friday (November 17th), as they’ll be discussing their full-year results as well as reviewing plans for their future. The call will begin at 5:30 PM EST.

The call is actually a Webcast accessible through the corporate website (http://www.eaglebroadband.com/), and requires Windows Media Player or Real Networks RealPlayer to listen in. If you’d like to submit questions prior to the call, or to learn more, just click here.

Truth be told, we think the strategy discussion about their future is going to be a lot more meaningful than last year’s results. As we’ve mentioned before. Eagle’s entry into the IPTV business is brand new, yet has the potential to completely reshape the company…for the better. We suspect part of the call will be devoted to detailing that enterprise.

Remember our comments from a few days ago regarding Eagle Broadband’s (AMEX: EAG) roll-out of a viable, revenue-generating IPTV service? Well, the idea was confirmed today, as the company is appearing at a telco conference and expo in Dallas…presenting their services for sale. The fact that they’re putting out a shingle, so to speak, tells us they’re plenty comfortable enough with the recent launch of IPTV services through ANEW Broadband, based in Florida, to go out and reproduce the model for other customers.

We said it then and we’ll say it now….being able to ‘take it to the streets’ is a complete paradigm shift for the company, and by extension, for investors.

The total attendance at the conference is only about 2500, but it’s 2500 of the right industry decision-makers to more than justify the booth Eagle is hosting at the expo. The newest of Eagle’s set-top boxes will be featured, and we suspect Eagle reps will be using the ANEW deal as ‘proof of concept’ for other telco companies looking to upgrade their current offer. We cant wait to see what comes of it.

For the full release, click here.

In the meantime, the stock has made a full 62% retracement from the recent peak of $1.12 (starting from the base of 47 cents in mid-August). The good news for owners is that the retracement level of 72 cents has been holding up just fine. We think that will be the make or break line in the short run.

ANEW Broadband, a Florida-based provider of broadband web connectivity, telephony, and cable television, recently announced they would be utilizing middleware called iTVManager to control the delivery of Eagle Broadband’s (AMEX: EAG) television content and communication services.

Or, in simpler terms, one of Eagle’s customers now has the right software in place to start the delivery of Eagle’s offering……which is internet connectivity, digital television, and telephone services. As such, Eagle can start billing the customer, as the service is being provided.

The term ‘middleware’, as you may have guessed, is just the means by which ANEW controls (routes) various broadband services from one central location to each individual customer. In this particular case, the middleware is software platform made by Minerva Networks…called iTVManager. It was not necessarily ANEW’s only choice of middleware, so congrats to Minerva. Likewise, Eagle wasn’t ANEW’s only choice of service providers, so we also congratulate Eagle. Plus, Eagle enjoys another nice side effect…the set-top boxes being used by the end-customer (in-home) is a receiver manufactured by Eagle. Presumably, they’re being bought or rented by Eagle/ANEW customers.

As for what this means to Eagle - and shareholders - it’s mostly validation. If there was any doubt about the company being able to deliver on the promise, it’s now been washed away…Eagle has real customers, and can reap real revenue; the service is being provided.

Now that the first one is under their belt, we expect to see more and more news like this from Eagle as additional customers are acquired.

For the full press release, click here.

You ever heard the phrase ‘The bigger they are, the harder they fall’? It can be true of stocks as well. For that reason, most investors get a little nervous (and rightfully so) when an issue puts up giant gains in just one day - it almost always seems to invite a reversal.

However, it isn’t necessarily a bad thing. You just have to exercise a little patience when - or even if - responding to the surge. Sometimes, the trick is letting all of the upside volatility play out, and then letting all the profit-takers do their damage, before getting involved.

Not one, but two of our focus company stocks may be a prime illustration of this point. Both rallied sharply last week, then both fell back in the shadow of their own rallies. Now with the shake-up most likely complete, putting the trader hat back on is a little easier to do. Let’s take a look at what we like so far about each chart…

On the 16th, CEL-SCI (AMEX: CVM) rocketed from 67 cents to 76 cents, resulting in a one-day gain of 13%, even though there was no news behind the surge. The gain was impressive, but wound up being too much, too quickly. The stock eased back to a low of 70 cents four days later, after trading as high as 81 cents the day after the big gain. At that point, some traders would have chalked it up as a fluke, and figured it was on the way to lower lows. And, we can’t say we entirely blame them. However, it pays to keep watching when you get such a move. CEL-SCI shares were up to as high as 79 cents on Tuesday, quickly recovering from the pullback seen just a few days earlier. The implication? Pay attention to high volume rallies, even if the immediate result is a dip. There’s always more to the story than one or two days. In this case, the surge may have been a brief flash of what the market really thinks about CEL-SCI stock. The dip was just a second chance at a low entry point.

Eagle’s (AMEX: EAG) chart went through the same process, getting launched from 76 cents to $1.03 on the 16th (and had been as high as $1.12). The stock fell back, all the way to 70 cents by Monday. But, the 20 day moving average line acted as support, and pushed shares back up to a high of 90 cents on Tuesday. That’s a 25% gain from Monday’s close…and probably one that not many people figured was going to materialize.

The bottom line is this….buying on a dip is like catching a falling knife, but simultaneously, buying after a big move isn’t really any smarter. The best course of action is probably somewhere in between. To make the most of these opportunities though, you have to keep these names on your radar for a while - to see how they play out. I can guarantee you somebody saw the early bullish hints on Tuesday for both of these stocks, and were able to get in well under the highs. Never, never assume a high-volume surge is an isolated event. If support is found, as it was for Eagle, you’d have to be astutely watching it to know it.

Now that both stocks have made two big gains while above the 50-day moving average line, the technical bullish argument - and longer term upside momentum - is considerably strengthened.

And yes, Tuesday’s big rallies for both names qualifies as the size of gain you may want to be careful about jumping onto right away.

How would you like another $900,000 in your pocket? If you want to know what it feels like, just ask someone at Eagle Broadband (AMEX: EAG). Aero-Vision Technologies, who had been leasing equipment from an Eagle subsidiary, decided to buy out the lease for the sum of $900,000, paid in cash.

No, it doesn’t boost the bottom line by 900K; it’s mostly just a case of getting paid now rather than paid later (adjusted for time, of course). However, as long as it doesn’t cost Eagle anything extra, money now is always better than money later.

The most recent accounting records (as of May 31st) show ‘cash on hand’ at $261,000. Barring any significant changes between now and then, the total should now be around $1 million. That’s going to provide a lot more flexibility for Eagle as they continue to build their IPTV business.

For the full story, click here.

Back in the June 23rd newsletter, we made what we think is a valid point about handling - on a personal level - the fine balance between being an investor and being a trader. To restate the point we made then (although we encourage you to reread the whole edition), there are good reasons you should be both, depending on the circumstances. Today, we’re facing such a scenario with one of our profiled stocks…although we’re still thrilled to have the problem at all.

Since we issued our initial profile of Eagle Broadband (AMEX: EAG) on September 15th, EAG shares have run from 59 cents to the current price of 90 cents. That’s a 52.5% gain in about one calendar month, yet is still overshadowed by the 89% gain we saw on an intra-day basis yesterday. Needless to say, shares are off a bit today, as traders are undoubtedly locking in some gains created in the rocket-like rise.

While we generally dislike such disruption, as it’s frequently an errant choice on the part of the sellers, we don’t think it’s necessarily crazy in the particular case. In fact, from a ‘trader’ perspective, it’s the right thing to do. It wasn’t the original intent or expectation; we liked Eagle Broadband for more fundamental ‘investing’ reasons. Regardless, anybody who bought shares last month is now playing the role of the trader…and must decide whether to risk a pullback, or stick it out and see where this thing goes.

In general, we’re inclined to lock in the sure thing. Surprised to hear that from a small and micro cap stock site? Yes, we’re aggressive - by definition. But, aggressive is not a synonym for stupid. When gains are on the table and the risk/reward scenario has changed, then the strategy must be adapted to reflect the new risk/reward ratio. Clearly, in the wake of today’s dip, some other folks are already thinking the same thing.

If a stock in this situation does indeed rebound and start to move higher, there’s no reason we can’t go out and buy it again. After all, the fundamentals we liked before still apply now.

Some traders/investors who can’t decide may think about hedging the bet by locking in gains on part of the trade, while letting the rest ride. That, too, could actually be a pretty wise move. The choice is always yours. Just be smart about it.

Don’t forget, SmallCap Digest offers free stock ideas and market commentary through our e-newsletter. Be sure to sign up today using the link in the top right corner…and don’t forget to respond to the confirmation e-mail.

If you’re following the emergence of Eagle Broadband (AMEX: EAG) along with us, then you definitely don’t want to miss their mid-quarter conference call this coming Wednesday (October 18th) at 5:30 PM EST. The company gave the completed IPTV broadcast reception station in Florida as the main discussion topic, but we suspect there will be a lot more put on the table than that old news….it was finished and became operational several days ago. And although we don’t know exactly what else is going to be said on the call, we have little doubt it’s going to be worth the time, whether you’re already a shareholder, or just an interested party.

And if you’re not following the emergence of Eagle Broadband as a key IPTV player, you may want to think about it. The stock is up 46% from September’s low of 52 cents, and is up 28% since we began covering it on September 15th. However, the recent rally has only scratched the surface of how much more recovery room lies ahead. Be sure to look through today’s Eagle-focused newsletter edition to get caught up.

In the meantime, you don’t want to miss this call…..err, webcast, actually. To listen in, you’ll need to use a computer with speakers, rather than a phone.

To submit questions, or to learn how to participate in the call, click here.

It was only last week we looked at charts for CEL-SCI (AMEX: CVM) and Novelos (OTCBB: NVLT). Both of them had seen their respective shares move above the 50 day moving average lines for the first time in months. And, the gains had been made on no apparent news. In general, this can be an early hint of a recovery effort…where potential buyers start to test the waters once the worst of any downturn seems to be in the past. Although neither CEL-SCI nor Novelos have explosively taken flight since the event, both have held their newly-claimed ground….which is something that can’t be said for very many names.

In the meantime, Eagle Broadband (AMEX: EAG) has mirrored CVM’s and NVLT’s bullish cross above the 50 day line. The stock managed to recently move upward in a well-paced manner - not the wild kind of gain that just invites a big reversal a couple of days later. Even better, the volume behind the upward push has started to perk up. Better still, shares survived a high volume selloff from October 3rd. So, investor attitude may be quietly changing for the better here. Of course, for those who feel EAG will get traction from here, this could make for an excellent entry point.

Our Fibonacci retracement lines are plotted at 47 cents (0%), 76 cents (38.2%), 94 cents (61.8%), and $1.24 (100%). EAG shares closed at 66 cents on Tuesday.

If you didn’t believe in the huge opportunity the first time we discussed it on September 15th, then consider this your second notice (well, third, technically). We think Eagle Broadband (AMEX: EAG) is on the verge of becoming a key player in the relatively un-competitive (so far) IPTV market. The ground-breaking for the headend facility we discussed in a September 21st blog entry? The project is completed…meaning the company is now receiving more than 100 channels of television content. When it’s all said and done, Eagle will be receiving and redistributing over 250 channels of IPTV content, with many of those channels being IPTV-exclusive to Eagle.

So, we reiterate…if you want to find a viable ground-floor opportunity, this is one we like. Discipline and defense are prudent, as always. But, Eagle now has a tangible, revenue-driving offer they didn’t have before…which is good for the company, and good for the stock.

When we first profiled Eagle Broadband (AMEX: EAG) in our September 15th edition, we explained how IPTV was going to be the new era of television content delivery. And Eagle, with over 200 channels worth of content to supply to…whoever, was poised to lead the charge. Well, it wasn’t just some philosophical, hopeful, generalization to be realized at some point in time in the near or distant future. Eagle just announced the beginning of construction of its super head-end and satellite farm in Miami, Florida. The Florida-based head-end operation will collect signals from over 30 satellites to deliver a broad range of content from more than 250 cable channels. So, the concept is becoming a reality. Click here for the full story, and complete explanation of the infrastructure being built.

Can the stock be far behind the progress of the company? Other investors seem to be getting behind the idea…and behind EAG shares as well. The stock started to perk up a little after we issued the profile on the 15th, and did so on higher volume. We saw a slight dip into the red yesterday, but today the bulls are back at it.

Also, you may have heard some news about one of Eagle’s board members being dismissed. Here’s the deal…

Dean Cubley was removed from the board because of a suit he filed against the company. He says the company failed to pay on a $2.3 million loan he made. The company states all of the payment that was actually due has been paid off already. The company further claims Cubley wrongfully induced the board to approve the issuance of the note in the first place. As of right now, we don’t see it amounting to much either way. While corporate turmoil like this can sometimes be a red flag of bigger, more subtle problems, we don’t see it here. Eagle is too small and close-knit, and Cubley’s claim is too unsubstantiated so far, for the matter to swell into something meaningful. In fact, the market apparently couldn’t care less. Shares closed one cent lower yesterday after the news came out, and are flat for today.