A related article on Wall Street Journal today:
Paul Allen Lifts
Metricom Stake
To 49% of Firm
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By Quentin Hardy
Staff Reporter of The Wall Street Journal
Vulcan Ventures Inc., the investment company of Microsoft
Corp. co-founder Paul Allen, boosted its stake in Metricom
Inc. to 49% from 33%, sending shares of the wireless
network provider up 15%.
Besides spending $56 million, or $12.04 a share, for
4,650,000 Metricom shares, Vulcan President William
Savoy said the company will take "a leadership position"
on Metricom's board. He said Vulcan's investment-agreed
upon with Metricom last Thursday and still subject to
regulatory approval-will be used to hasten development of
a fast data-delivery technology.
Metricom, which started life as a vendor of
radio-communications gear to utilities, sells a wireless
service called Ricochet, which lets users log onto the
Internet or corporate databases without hooking their
laptops into a phone line.
Its product has been well-regarded, despite data rates of
just 28,800 bits a second-formerly a quick speed but now
half the industry standard.
But with coverage limited to just a few major U.S. cities,
Metricom has had difficulties winning customers and
securing financing, and has seen its stock price fall from a
high of $25.75 a share in 1995, to $4.375 a share last
August. In the second quarter, Metricom, based in Los
Gatos, Calif., reported a net loss of $15.5 million, or $1.17
a share, on sales of $2.6 million.
In trading yesterday on the Nasdaq Stock Market, Metricom
closed at $14.75, up $1.875.
Mr. Savoy said Metricom is developing a technology that
will make Ricochet deliver data at 128,000 bits a second,
"but they need money and focus . . . this amount of money
buys them a lot of time." The new technology, he said,
should be commercial in nine months to one year.
While reluctant to criticize Metricom's current
management, Mr. Savoy also indicated plans to vastly
expand Metricom's markets, so far limited to San
Francisco, Seattle, Washington, and some universities and
airports. The new technology "can't be done regionally, it
has to be done nationally," he said.
Robert Dilworth, Metricom's chairman and chief executive
officer, said Mr. Allen's group had not suggested any
management changes for his company, but was "focused on
the technology. That is their primary interest." In light of the
Vulcan investment, he said, Metricom is postponing a
planned $125 million bond offering.
"We were under pressure to bring in more subscribers,"
Mr. Dilworth said. "This [investment] relieves that."
The investment comes less than two weeks after Mr. Allen
increased his stake in Metricom from a 14% holding,
through a purchase of 2,583,000 shares from Lindner
Investments, a portfolio-management concern. As a
purchase from an outside shareholder, that investment
didn't increase Metricom's working capital.
Assuming Vulcan's newest Metricom investment is
approved, the Bellevue, Wash., investment company will
own a total of 9.1 million shares of Metricom, valued at
about $134 million-making it one of the largest among
Vulcan's 52 company investments. Other notable
investments include a $500 million investment in privately
held film studio Dreamworks SKG; 7.4 million shares of
HSN Inc., parent of the Home Shopping Network, valued at
about $300 million; and a 2.8 million-share stake in Cnet
Inc., an Internet company, valued at about $90 million. |
