Nextel Close to Deal With eDispatch
by Adam Peeler
adam@stockgroup.com
February 8, 2000
Wireless giant Nextel Communications Inc. (NASDAQ: NXTL) is expected to sign a deal with small cap equipment provider
eDispatch (CDNX: EWD) by the end of the month, a Nextel spokesman said today.
"We haven't announced anything with eDispatch but they're really the only one out there," said
Nextel's investor relations manager Paul Blalock. "We're getting close to an announcement,
there'll probably be something at the Wireless 2000 conference at the end of February."
The sixth largest wireless service provider in the United States stopped short of announcing the
deal Friday with eDispatch.com (CDNX: EWD) and this week, investors showed their
disappointment by driving the stock down 55 cents below Friday's close of $12.50.
But both the Nextel spokesman and an analyst indicated today that it's only a matter of time before eDispatch signs a deal to supply
the $33 billion Nextel Communications Inc. with its wireless dispatching technology.
On Friday, eDispatch announced it signed an evaluation agreement with Nextel. Rob Millham, a high tech analyst who covers
eDispatch says it's all part of the courtship process.
"The fact that the arrangement is an evaluation agreement and not a commercial agreement is a disappointment to the market but it
shouldn't be," said Millham. He has revised his target for eDispatch from $C4 in November to $C7 in January, and now to $C15.
At mid-day today, eDispatch was trading at $C11.75, off $C0.40. It has ranged from a high of $C15 to a low of $C0.50.
"While the term 'evaluation agreement' may suggest only a tentative arrangement, we believe there is much more substance to this
announcement than meets the eye," Milham added.
eDispatch is one of two publicly traded companies, the other being Mobile Data Solutions Inc. (NASDAQ: MDSI), with dispatching
software for use over Internet-based wireless networks that in effect turns a 'smart phone', or data phone, into a mobile computer
terminal with an Internet portal for receiving orders.
In other words, the software combined with the Internet and communication products offers a more efficient system for companies to
organize their workers in the field.
Millham, whose company was involved in two previous rounds of financing with eDispatch, calls wireless dispatching one of the next
hot applications for wireless carriers. He explained communication between cell phone or radio takes more time and resources than
Internet dispatching so he expects every wireless carrier within a year to offer a dispatch product to their customers.
"Evaluation agreements are part of the normal protocol within the telecom industry," he said. "It is a process that progresses from a
non-disclosure agreement, to an evaluation agreement and finally, to a commercial agreement."
If the deal indeed comes to fruition, eDispatch will be at the center of an industry that's estimated to be worth $1 billion in sales the
next two years, according to Millham. He said eDispatch could see $C300 million in annualized revenue from Nextel by 2004 if 'the
evolving business plan is met'.
In the past two years eDispatch CEO Brian Ellis has helped bring the company out of relative obscurity. In 1998, the firm was called
InStep Mobile Communications Inc., which specialized in dispatch software for taxi fleets. Then the company switched gears.
"Last October it seems like the words 'wireless' and 'Internet' finally got married," said eDispatch CEO Brian Ellis. "It's funny but if
someone had invested $C25,000 last January in eDispatch, you'd have over a $C1 million today. That's significant for a small
company playing in a global space."
Ellis said Nextel and eDispatch have started beta testing the dispatch service with a few of Nextel's customers.
"Telecommunications firms typically sign their agreements after they're successful," said Ellis. "When the beta testing is successful
the service can be launched. At this point and time (the prospect of signing a deal with Nextel) is as good as it gets."
In addition to Nextel, Ellis said eDispatch is targeting the top 15 telecommunications companies in North America as potential
customers.
"We believe 80 per cent of all wireless Internet applications for the next three years will be sold through these people so it's the
quickest way to enhance our revenues."
In September of 1999, eDispatch closed a deal with its first big customer- Southern LINC, which is a subsidiary of the Southern
Company, the largest electrical utility in the US.
|
