A revitalized balance sheet, renewed cost-cutting and a streamlined focus have things looking up for a little-known microcap in the wireless broadband equipment sector.

After several years of spotty performance, San Jose, Calif.-based Terabeam Inc. (Nasdaq: TRBM) finally could be ready to break out. Formed through a series of acquisitions, most notably the acquisition of Proxim Wireless in 2005, Terabeam primarily provides core-to-client solutions for broadband municipal wireless networks. It has shipped more than 1.5 million wireless devices to more than 200,000 customers.

Terabeam, with a market capitalization of $48 million, estimates the value of the broadband municipal wireless market at $3 billion over the next three years. While Terabeam is a small fry in the wireless broadband equipment market, it believes it can continue to hold its own in the lower-profile muni and public safety segment of this fast-growing market.

Terabeam has taken several steps recently to position itself for sustained profitability and growth. In July, Terabeam raised $7.5 million in a private placement and sold two patents for $2.5 million in cash. Then, earlier this month, Terabeam announced the sale of its small, money-losing Ricochet wireless network. This move takes Terabeam out of the service provider business and makes it a more-focused, wireless equipment pure-play.

Thanks to recent cost reduction efforts, such as the outsourcing of more of Terabeam’s development activities to India, the company expects to realize $1 million in quarterly cost savings beginning in the third quarter. This reduced break-even level puts Terabeam in the vicinity of hitting cash flow break-even with just modest quarterly revenue growth.

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