DJ Metricom Up 7% On Speculation Regarding Financing Deal
Dow Jones News Service ~ May 8, 2001 ~ 2:24 pm EST
(MORE) DOW JONES NEWS 05-08-01
02:24 PM DJ Metricom Up-2:Co Hasn't Made Any New Announcements>MCOM By Bob Sechler
Of DOW JONES NEWSWIRES
AUSTIN, Texas (Dow Jones)--Metricom Inc. (MCOM) shares climbed 14% Tuesday as part of a two-day surge stemming from speculation the company is close to securing a much-needed influx of financing.
Metricom, whose shares saw an 11% rise Monday, announced at the end of March that it had only enough cash to last through August and was seeking additional investment. At the time, the firm estimated that it needed about $500 million in new financing to achieve positive cash flow from operations.
Officials from the high-speed wireless data company declined to comment extensively Tuesday, except to say they haven't made any recent announcements regarding new financing arrangements.
A spokesman for Vulcan Ventures, Microsoft co-founder Paul Allen's investment arm, also declined to comment. Vulcan Ventures is a major Metricom shareholder.
Peter Friedland, an analyst with W.R. Hambrecht, said the company's cash woes are well known, and "basically we're just kind of waiting to see if these guys can raise more money."
Friedland, who has a neutral rating on the stock, said its recent climb may be attributable to anticipation of new financing. But he also pointed out that the stock has simply been volatile.
Another analyst, who declined to be identified, said that even if the firm does obtain new financing, it probably will amount to only a stopgap measure unless the company's business model is overhauled. Metricom, San Jose, Calif., has struggled to roll out its wireless mobile network and also has had difficulty finding partners to sell its service.
Speculation regarding a new financing deal for Metricom also has caused its bond prices to rise. They're now trading at about 27 cents on the dollar, up from 22 cents.
Still, that level indicates that Metricom creditors have doubts about the firm's long-term viability. In addition, almost 70% of Metricom's float is held by short sellers, indicating a high degree of skepticism.
Metricom shares were recently up 64 cents, 13.4%, to $5.41 on volume of 1.7 million, compared with average daily volume of 1.1 million. The shares climbed 47 cents Monday from Friday's close at $4.30.
-By Bob Sechler, Dow Jones Newswires; 512-236-9637
(Dow Jones Newswires Reporter Carol Remond contributed to this report)
(END) DOW JONES NEWS 05-08-01
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