Gogo Inc (GOGO): This Near Monopoly Can Still Double The Size Of Its Business

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It’s happened to all of us.

We’re running down an airport corridor, sweating like a stevedore and hoping like hell we make the flight. We fly down the concourse and arrive at the gate just as the ground crew is beginning to close the door.

Huffing and puffing, we make it down the jetway, into the plane and to our seat.


Gogo Inc (NASDAQ:GOGO)We reach into our pocket and extract our cellphone. But before you can say “Words With Friends,” the flight attendants sternly instruct us to stow all electronic devices. Unable to check in with a loved one waiting on us, we’re held incommunicado until we land.

It doesn’t have to be this way. And it’s not going to be this way much longer.

Rules about the use of cellphones and other electronic devices are currently under review by federal regulators. The Wall Street Journal reports:

“The Federal Aviation Administration is expected to relax the ban on using some types of personal-electronic devices at low altitudes, allowing passengers leeway during taxiing and even takeoffs and landings. The new rules would likely mean an end to familiar admonitions to turn off and stow all electronic devices. Details are still being debated. Still, the [move] reflects a consensus that the existing rules, essentially unchanged since the 1960s, have been overtaken by dramatic changes in technology.”

The news was heralded as long overdue by millions of fliers, who contend that the rules are outdated. Soon, observers say, most electronic devices, even cellphones, will be used on board during flight.

The Journal’s article was published June 21. The same day a new company hit the Street… Shares of Gogo Inc (NASDAQ:GOGO), a company that provides in-flight Internet connectivity, began trading.

Gogo is a true game-changer. This company’s technology curve isn’t going to be drawn over decades… I expect it to take off in a matter of months. It will look more like a vertical line on a chart.

Please take careful note: I’m not saying Gogo Inc (NASDAQ:GOGO) “will be” or “might be” a game-changer. I’m saying “is.” Present tense.

The company has already succeeded in bringing the Internet to air travel. Gogo Inc (NASDAQ:GOGO) brings the mobile Internet to the sky. In fact, just two days before the IPO, I personally used Gogo on a flight to Minnesota.

Here’s how the company describes its market position in its prospectus:

“Gogo Inc (NASDAQ:GOGO) is the world’s leading provider of in-flight connectivity. We have the largest number of online aircraft in service and are a pioneer in wireless digital entertainment and other services in the commercial and business aviation markets. … We enable our commercial airline partners to differentiate their service offerings, increase passenger satisfaction and unlock new revenue streams.”

I’ve come up with three key points that I think make the case for Gogo Inc (NASDAQ:GOGO) to rise significantly from current prices…

1. Revenue is on the rise. Gogo Inc (NASDAQ:GOGO)’s top line rose 146.7% from 2010 to 2012. Annualizing this year’s first-quarter results gives us a reasonable 2013 revenue estimate of $283 million, a year-over-year gain of 21%. That computes to a compound annual growth rate of 44%.

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