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WFI Marks the Hot Spot

Sometimes standing in the shadow of Google (GOOG - Get Report) isn't such a bad thing.

Take WFI (WFII). Earlier this month, when it was learned the San Diego-based wireless equipment company had partnered with Google in their proposal to turn San Francisco into a free wireless-Internet zone, it was Google that grabbed all the headlines. And this was despite the fact that WFI issued the press release, not Google.

Partnering with Google on a high-profile project is a little like opening for the Rolling Stones: You may have millions of people paying attention to you for a while, but a few days later many of them have forgotten you. Google's stock is up 12% since the announcement, but WFI's is up 4%. (Google's gain was buttressed by its strong third-quarter earnings, while WFI has yet to report its numbers.)

But for WFI, playing sidekick to Google may be just the boost it needs. If Google's proposal gets the nod from San Francisco, WFI stands to benefit. And investors looking to get in on the emerging trend of wireless municipalities can buy Google at 42 times its 2006 earnings, or WFI at a ratio of 17 times 2006 earnings.

Of course, another option is buying EarthLink (ELNK - Get Report), which won another high-profile contract to bring a wireless network to Philadelphia. But with Earthlink you'd get a company that has revenue that fell by 7% last quarter, and with WFI you get an 8% growth rate.

What's more, WFI has the leverage that Google brings to the package. The partnership faces 16 other competing bids, but judging from the press alone, the momentum appears to be behind Google. While Google critics voice the usual privacy concerns whenever the company steps into a new arena, San Francisco's Web site promises, "the City will explore the most cost-effective ways to ensure universal, affordable wireless broadband access." And Google and WFI have offered to do it at no cost.
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