METRICOM - Wireless Data Communications Message Board

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Technology Stocks : METRICOM - Wireless Data Communications

MCOM 0.0115

0.0%

2:50 PM EST

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To: Willy who wrote (350)	8/14/1997 2:49:00 PM
From: E_K_S	of 3376

Willy - I recently have been researching this company and in fact took a tour of their facility yesterday. Here are a few of my thoughts. I do not own any shares but am thinking of acquiring a large position as I proceed with my research. 1) According to their most recent financial ststement. Total shares out 13.6 million. Cash and short term investments around $2.01/share. Fixed assets (I assume hardware acquired to run current services) about $2.34 per share. 2) Long term debt - $45 million or about $3.30 per share. 3) Subscription base currently 15,000 subscribers and growing. Here in Silicon Valley the service is a huge hit. Especially for Intranets, LAN and WAN for new startup companies. It is much more cost effective to use the RF technology then to lay new wires. 4) Future plans are to implement 100 KB/sec and perhaps 200 KB/sec speeds but these would be sold as preminum services. 5) According to my contact current system utilization is at 35% so the new customers represent higher marginal revenues until any new hardware upgrades are required. The company has budgeted more hardware upgrades in 18 months to expand system throughput identified in # 4 above. 6) In certain areas in Silicon Valley (Los Gatos, Monte Scerno, parts of Cupertino) GTE is the primary fixed line provider. GTE currently does not support modem connections (and many lines do not work properly) and the Ricochet product is the only alternative. 7) My guess is that at some point the increased customer sign ups will produce very large free flow cash flows. I am still calculating the numbers as I do not know what the average term of the long term debt is (ie. five years, 10 years etc.). At current subscriber levels they pay down their debt in 7 years. I would like to see this below three years which means they need to increase their subscriber base 100% or to 30,000 customers. This would only bring total capacity to between 65%-70%. 8) According to my discussions with the company, the July & August new signup rates are at record levels. With book value at about $1.00 per share and very good short term "Current Assets" and long term debt structured over several years, it appears to me that this company is well positioned. They really need to expand their subscriber base which I believe they can do with the right marketing program. Their service is very competitive here in Silicon Valley and IMO they could obtain another 15K customers in this market alone. EKS P.S. Trading volume in last few days is much higher than the 90 Day average so it appears to me that new buying is comming in at these levels. My short term target is $6 1/2 and if they get their subscriber base up, it is possible to see mid teens next year.

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