SonicWALL-BUY Recommendation

Closing price October 18, 2008-$4.50

Cash at June 30, 2008 was approximately $161 million or $2.76 per share. So at the current price cash is 61% of the market cap. Our valuation based on annual sales of $220 million and 70% gross margins is $10.44 per share. SNWL is trading at 43% of our valuation.

Latest quarter sales were up 19% to $55.8 million. They made non-GAAP earnings of $.06 per share. Gross margin exceeded 70%.

SNWL has been aggressively buying back shares and purchased 5.8 million shares in Q2. The current repurchase has just about run-out, but we would be surprised if they don’t initiate a new one with the current low share price.

Earnings due out next week on the 28th.

SNWL trades almost 400,000 shares a day, so liquidity is not an issue here.

There are about 59 million fully diluted shares outstanding.

About SonicWALL, Inc.
Founded in 1991, SonicWALL, Inc. designs, develops and manufactures comprehensive network security, email security, secure remote access, and continuous data protection solutions.


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