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Friday, August 16, 2002 |
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• Ricochet rolls again in Denver • Grand Jury subpoenas Charter • Study: Hong Kong leads high-speed access race • Nortel's auction of optical unit in limbo • QUALCOMM launches 3G information web site Ricochet rolls again in Denver Less than a year after snatching up the broadband wireless assets from bankrupt Metricom Inc. for fire sale prices, Ricochet Networks Inc. has re-launched the service in Denver. RNI, which is owned by parent company Aerie Networks, purchased the assets in Nov. 2001 for $8.25 million with the intention of reviving the service. Before it went bankrupt, Metricom built the Ricochet network in 21 cities with 51,000 subscribers. The service offered wireless broadband connections at up t 128 kilobits per second. In February, the company launched a test in Denver to determine the readiness of the network. To get the service back on its feet, RNI inked a public/private partnership with the city and county of Denver. The company has given the city modems and service in exchange for the joint development and deployment of Ricochet-based municipal and public safety applications. Denver Mayor Wellington Webb said the technology has "great potential" for the city. "This next year will enable us to test out applications like high-speed access in police patrol cars," Webb said in a statement. The city also will continue to experiment using the network to enable the fire department to pull up site plans en route to a fire or the paramedics to access health records or determine emergency room availability while they are responding to an accident. The service is now available to residents and businesses in Denver for $44.95 a month. A Ricochet modem, which must be purchased to power the service, retails for $99.95. RNI is negotiating with other cities, including New York, to re-launch the wireless broadband service. Since Ricochet's inception, Metricom was hailed as a forerunner in the wireless broadband market, but the high cost of building out its network forced Metricom into bankruptcy. Related stories:
Roughly 400 Scientific-Atlanta Inc. employees will receive their walking papers, as the set-top box maker looks to trim costs. The 6 percent reduction in its work force will translate to an annual $40 million savings, beginning in the second half of fiscal 2003, S-A said. The company will take a one-time charge of $15 million, or 6 cents a share, in the first half of the year, with the lion's share of the charge being accounted for in the first quarter 2003. The majority of the cuts, which affected every sector of the company, were effective immediately, but some will occur over the next several months. Affected employees will receive a severance package and outplacement services, including job networking, resume assistance, access to job opportunity sites and coaching. In July, S-A posted fourth-quarter sales of $390.1 million, down $229.5 million from the same period a year ago. A Q4 net loss of $15.7 million, or 10 cents a share, was reported. In the same quarter a year earlier, S-A reported net income of $73.4 million, or 44 cents a share. Part of S-A's problems stemmed from Adelphia Communications Corp.'s bankruptcy. S-A de-booked $199.8 million in orders from Adelphia. The two companies have however reached an agreement that they will do business in the future, S-A said. The company shipped 805,000 Explorer set-tops during the quarter. Related stories:
Charter Communications Inc. has joined the growing list of companies in the telecom sector to raise the eyebrows of federal authorities since Enron Corp. collapsed and Adelphia Communications Corp. filed for bankruptcy. The MSO has received a grand jury subpoena from the U.S. District Attorney's Office for the Eastern District of Missouri requesting documents related to its customers and accounting practices. Specifically, federal prosecutors have requested documents related to its current and disconnected customers and its procedures related to accounting for its costs. During the first quarter, Charter disconnected 145,000 marginal customers. The company said it has tightened its collection policy and procedures related to these marginal customers. "Charter believes the issues under investigation are similar to those raised in previously reported class actions pending against the company, and certain individual defendants, and will cooperate fully with the subpoena," Charter Senior Vice President of Communications David Andersen said in a statement. Earlier this month, a class-action lawsuit was filed in California alleging Charter used "misleading accounting practices that had the effect of misrepresenting its results of operations." Related stories:
Study: Hong Kong leads high-speed access race The majority of surfers in Hong Kong are hanging ten on the Web via a high-speed connection, one analysis says. Hong Kong is leading the race, with 66 percent of households connecting to the Internet via a high-speed phone line or cable modem, according to the Nielsen/NetRatings Second Quarter 2002 Global Internet Trends report. The rate of acceptance indicates " a well-developed high-speed infrastructure and the consumer desire to attain information at faster rates," says Lisa Strand, director and chief analyst at Nielsen/NetRatings. According to data collected through usage surveys, broadband usage has increased 8 percent since the first quarter, the report says. According to Nielsen/NetRatings, there are 553 million people with Internet access in the world, and despite wide acceptance in countries like Hong Kong, the majority of surfers are still connecting via a narrowband connection. The United States continues to dominate the Internet, with 166.4 million people access the Net, but according to Nielsen/NetRatings' findings less than 20 percent of those surfers are broadband users. High-subscription rates, geographic restrictions and lack of compelling content is holding back widespread broadband deployment in the US, Strand says. "The Internet has yet to hit on a must-have content that would inspire greater numbers of surfers to seek high-speed connections," says Strand. Sending and receiving e-mail remains the most dominant activity on the Internet.
Despite the lagging economy, AM Communications Inc. and ARESCOM managed to post positive revenue results. For the first quarter 2003, AM reported a 142 percent year-over-year jump in revenue, up from $4 million in Q1 2002 to $9.7 million. During the quarter, the company recorded a net loss of $172,000 million, and took a $325,000 charged related to Adelphia Communications Corp.'s outstanding receivables. AM, which offers design and development services for the broadband industry, said its broadband products business unit posted revenue of $5 million. The unit has posted a profit in the last 10 ten quarters. Operating income was $445,000, excluding a $504,000 Adelphia-related charge. The company's broadband services business unit recorded revenue of $4.7 million and an operating loss of $531,000 for the quarter. AM recently acquired broadband network installer Nex-Link
Communications Project Services LLC. In June, the company announced
a partnership with Harmonic Inc. to integrate Harmonic's broadband
networking systems with the AM Communications Omni2000 HFC Network
Management System. High-speed Internet access equipment provider ARESCOM doubled its annual revenues. The company posted $58 million in revenue for fiscal 2002, up from $31 million in fiscal 2001. Since its official launch less than six months ago, ARESCOM, which supplies equipment for the hospitality, residential property, telecommunication and ISP markets, has inked contracts to install its hardwired and/or high-speed Internet access equipment in more than 100 lodging properties. The company's goal is to have its equipment installed in 1,000 business-class hotels in the United States by the end of 2003. Related story:
Nortel's auction of optical unit in limbo
How far have valuations of optical component companies fallen in two years? After turning down an offer of $100 billion in stock from Corning Inc. in 2000 for its optical components business, Nortel Networks Inc. today seems unable to offload the unit for as much as $50 million. The auction for Nortel Networks' optical components business is "deader than a door nail," said one optical networking analyst, who spoke on condition of anonymity. Others added that there are a clutch of interested buyers for the business, but none willing to pay anywhere near the anticipated asking price of about $300 million in late May when the unit was put on the block, nor the $50 million many now deem it might be worth. In the deeply troubled world of telecommunications, auctions fail, of course, and are revived and sometimes fail again. A year might well pass before a sale is closed or the business is shuttered. That's exactly the time frame Allentown, Pa.-based telecom chip maker Agere Systems Inc. said Wednesday, August 14, it would follow for the sale or shutdown of its own optical chip division by June 2003. But analysts believe that Nortel, which has seen its shares trade for weeks at below $1 a piece, wants desperately to sell its optical components business rather than substantially downsize or shut it down. The reason: 70 percent of the chips it makes are sold to itself. Nortel's received some bids, too, say analysts. Silicon Valley powerhouses Intel Corp., JDS Uniphase Corp. and Agilent Technologies Inc., as well as Bookham Technology plc of Britain and Sumitomo Electric Co. of Japan have all expressed interest in the Nortel unit. But not at a price Nortel is willing to accept. Brampton, Ontario-based Nortel declined to comment on the progress of the auction. What's the problem? Jim Jungjohann, an analyst with CIBC World Markets, says one of the reasons the value of Nortel's optical components business fell so sharply so fast is due to the division's high cash burn rate of about $15 million to $20 million per quarter. The burn rate is not only unappealing in and of itself but limits potential bidders. Arnab Chanda, an analyst for Lehman Brothers Inc., added that Nortel's optical components unit generates about $150 million in trailing annual sales, but Nortel's own stock trades at 0.3 times annual sales. Dreams of fetching a premium seem dim indeed. Moreover, the optical components industry suffers from an enormous oversupply, not only of products but also vendors. Analysts estimate that there are 1,100 startups and more established companies selling optical components. And yet there are buyers out there for the unit even still. Vincent Valentine, senior vice president with Boston-based investment bank Fechtor, Detwiler & Co., said JDs bid for Nortel's optical components assets in Ottawa and California to gain a type of manufacturing capability for the making of high powered lasers. Valentine noted that JDs own manufacturing tended toward better packaging efficiencies, but lacked high power capabilities. JDs, he said, wanted to merge the two styles to make components with broader applications. JDs declined to comment.
QUALCOMM launches 3G information web site
A new web site has been launched by wireless technology company QUALCOMM Inc. that is aimed at showcasing 3G wireless technologies. The 3G Today web site focuses on code division multiple access (CDMA) wireless technologies. Included on the site is a wireless device database that can be searched by brand, country, technology, operator, device type and date of introduction. QUALCOMM has also included information on CDMA wireless services and service providers on the site. The web site can be found at www.3GToday.com.
• Nasdaq puts SPEEDCOM on notice SPEEDCOM Wireless Corp. has been warned that its stock will be delisted from the NASDAQ SmallCap Market on Aug. 22. SPEEDCOM's common stock fails to comply with the $1 minimum bid price requirement for continued listing, according to the notice. The wireless broadband solutions provider does not plan to request a hearing to review the NASDAQ staff determination. SPEEDCOM shares were trading at 11 cents as of 11:13 a.m. EDT. As of Aug. 12, the company has 10.9 million shares outstanding. The company expects to move its shares to the over-the-counter Bulletin Board. • Loudcloud completes name change It is official, Loudcloud is now Opsware Inc. Loudcloud's conversion to Opsware is designed to distinguish the company as an enterprise software company focused on IT automation software and separate Loudcloud from the managed services business. The company will now trade under the symbol OPSW. The company sold its hosting business to EDS for $63.5 million in June. • Birch Telecom lowers T-1 pricing Price is one way David can battle Goliath. Birch Telecom has slashed its T-1 service pricing to $399 a month. The new pricing structure offers businesses broadband access for about half the price of Southwestern Bell, according to Birch Telecom President and CEO Dave Scott. The T-1 Complete service includes 100 free e-mail accounts, 28 static IP addresses, primary and secondary Domain Name Service, 24x7 network monitoring and customer support, performance guarantees, router installation and configuration of customer workstations. Birch filed for Chapter 11 bankruptcy protection from its creditors at the end of July.
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