Metricom continues steady climb
Metricom continued its steady climb Monday, closing up $1.38, or 12.5 percent, at $12.38 on speculation that investor Paul Allen's newly acquired stake in the company will help turn Metricom around.
Today's surge follows a similar boost last week after officials confirmed that Allen, the well-known Microsoft Corp. co-founder, together with Vulcan Ventures Inc., had filed with the SEC to acquire an additional 2.5 million shares of company stock.
If approved, the acquisition would give Allen 33 percent of all outstanding shares.
The Los Gatos, Calif.-based developer of wide-area wireless data communications products has enjoyed a steady upswing in sales in the past year, but continues to post heavy losses.
Last quarter, Metricom lost $15.3 million, or $1.17 per share, on sales of $2.5 million. In the quarter ended Sept. 30 1996, it lost $11.1 million, or 80 cents per share, on sales of $644,000.
Though Metricom reported a $15.3 million loss in its second quarter, some analysts said its management has made some shrewd moves in the past year.
"A lot of people and investors were real skeptical when they went to these auctions and bid for a part of the frequency spectrum," said Albert Lin, an analyst at SoundView Financial Group. "Often, it costs a lot of money and takes too long before something like this bares any fruit. But getting that extra frequency space allows them to ramp up their throughput and provide many of the services that local telecos have been providing in the past."
In April, Metricom paid $1.45 million for licensed spectrum that covers 21 of the nation's 25 largest metropolitan areas. Using licensed and unlicensed spectrum, Metricom is developing a network that will provide customers with user speeds of 128kbps.
"With the deregulation of the telecommunications and cable markets, Metricom could become quite popular among local phone companies that want to add more wireless services to their menu," Lin said. "And for Paul Allen to show that he believes in the company, that's certainly viewed as a big positive by the market."
As of June 30, Metricom had more than 15,000 subscribers.