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Technology Stocks : METRICOM - Wireless Data Communications -- Ignore unavailable to you. Want to Upgrade?

To: rogermci® who wrote (1596)	7/27/1999 9:27:00 PM
From: Peter H. Hodge	Respond to of 3376

Here it is copied from the Yahoo board: Powerful Allies Giving Start-Up Fighting Chance Date: 7/27/99 Author: Reinhardt Krause If Microsoft Corp. co-founder Paul Allen and telecom whiz Bernie Ebbers put money behind the same start- up, maybe it's for real. But you wouldn't know it just by looking at the start-up, Metricom Inc., which provides wireless data services including Internet access. Los Gatos, Calif.-based Metricom has signed up only 29,000 customers in five cities and a handful of airports since its 1995 start. And it lost $13.2 million in the second quarter ending June 30. But MCI WorldCom Inc., molded by Chief Executive Ebbers into a phone industry giant, invested $300 million in Metricom in June. Allen's Vulcan Ventures Inc. investment arm, which already owned 49% of Metricom, invested $300 million more as part of the deal. With such formidable backing, Metricom plans to quickly expand to 50 markets by mid-2001. Metricom's network consists of shoe box-sized radio antennae on utility poles and street lamps. Users attach an external modem to notebook computers or hand-held devices. The modem costs $350, and unlimited Internet time is $29.95 a month. Tim Dreisbach, Metricom's chief executive, talks about its plans to compete with other wireless players in this interview with Investor's Business Daily. IBD: Metricom is upgrading its network to faster, 128 kilobit-per-second data speeds next year. Why is that important? Dreisbach: Our goal is replicating all of the access that people have at the desktop. We look just like wireline communications. We have a very good service today at 28.8 kilobits per second to browse the Web. As our business users want to have heavy duty e-mail, as graphics on Web sites become more extensive, clearly the desktop experience is at (faster speeds). We want to bring that to our users. IBD: What's your typical customer doing? Dreisbach: Through our network, they're accessing information in databases to help them do their jobs. They may be accessing data on corporate local area networks. They're also accessing the public Internet. It may be a lawyer, or a real estate agent at a client's location, who wants to look up information. IBD: Describe your relationship with MCI WorldCom. Dreisbach: When we close the deal in September they'll own 38% of the company. We feel that validates their belief in our technology and how big the market is going to be. In addition to the equity agreement, MCI will be a reseller of our services, which we'll provide to them on a wholesale basis. They're going to be able to set the end-user prices that they want. We'll work with them on a co-branding basis if MCI wants to bundle our service with other telecom services. At the same time, it's a non- exclusive deal. IBD: Even at speeds of 128 kilobits per second, will your network be able to compete with next-generation cell phone systems due out about 2003? Dreisbach: We're the fastest wireless data provider today. Our problem hasn't been speed, it's been coverage. We're going to launch ISDN-like (integrated services digital network) speeds around the country over the next two years. In the short-term, that's all people need to have replication of their desktops. Going forward, we'll be able to add further increases in speed on top of what we have. We understand capacity and we've engineered a network that delivers speed with lots of users. That's different than quoted speeds for unloaded systems with a small number of users. IBD: Microsoft has invested in Nextel Communications Inc., and MCI almost bought them. How do they stack up as rivals to Metricom for Internet access? Dreisbach: We're focused on data services. We don't believe that people trying to leverage (data) on top of a voice-based (network) have a system that's optimized to do what we do. We also have active relationships ongoing with Microsoft. IBD: Even with the $600 million in new funding from MCI and Vulcan, doesn't Metricom need more money to build out its system? Dreisbach: The $600 million gives us enough to light up a national network. We will need a little more to complete the expansion. Our vision is to go to the top 200 markets in the U.S. (C) Copyright 1999 Investors Business Daily, Inc. Metadata: MSFT MCOM

To: rogermci® who wrote (1596)	7/27/1999 9:30:00 PM
From: Peter H. Hodge	Read Replies (1) \| Respond to of 3376

And here's a response from an educated short: robtest: debating the IBD article by: reggae_spice (23/M/jm) 16756 of 16769 I guess the nice thing about a market is that two people can read the same set of tea leaves and see different things. For my part I read the article, most especially the part which says "Going forward, we'll be able to add further increases in speed on top of what we have. We understand capacity and we've engineered a network that delivers speed with lots of users. That's different than quoted speeds for unloaded systems with a small number of users. " And I did NOT see from that , that they would be able to offer speeds in excess of 128k. What I DID read from that as an Engineer who works with systems, is that they intend to do load balancing across the WAP's to give increased bandwith per user in order to scale the number of users that can be on a given WAP, without speed deficiency. To put it another way, just like cable, MCOM's architecture is a shared designed, the more people using the service, the slower the service will be. What the article says is that they have unstated ways to preserve access times/keep network latency low, as user load decreases. Personally I find that concept questionable, but I won't quibble with; I am quibbling however with the idea that a user, even if he is the only one on the Ricochet network, will be able to exceed 128k (or around 14kbs throughput). Additional information I found fascinating is this statement which read "With such formidable backing, Metricom plans to quickly expand to 50 markets by mid-2001" Hrmmmm....how many of you longs want to say mis-print? In any case the most up to date information from this article has ricochet deployment starting in mid-2000, and 50 markets by 2001. This represents a 'new' 6mth increase to add 6 new markets, as the original figure was 44 markets by the end of 2000, with the roll starting in mid 2000. Complacency...its a killer. Additional items of note: The WCOM investment of 300 million ($10 buxs a share), gives them a 38% stake in the company, when the deal closes in September. Unless of course MCOM closes below 10 in september, MCI basically is printing themselves money in a no-lose proposition. (Usually when companies take a stake in another company, they pay a premium to the share price) Essentially WCOM in september is probably going to get their shares for 'free'. The dilutive impact of this should be clear to all investors both long and short. Finally I appreciated this paragraph "Through our network, they're accessing information in databases to help them do their jobs. They may be accessing data on corporate local area networks. They're also accessing the public Internet. It may be a lawyer, or a real estate agent at a client's location, who wants to look up information. " which once again illustrated to me that they are going after the business market, and NOT the consumer market. The business market of course would be easier to grow, but is much smaller than the consumer market. In other news, AOL with its high P/E, and rather high P/S ratio broke a key support level today, along with EBAY. Reggae FD: short on mcom