Still private.
terabeam.com
Subject 33811
Furthermore,
thestreet.com
Wireless Whimsy: Investors
Drinketh From the Cup of Meade
By Scott Moritz
Staff Reporter
3/15/00 9:02 PM ET
You wouldn't have guessed that the next hot trend in
telecom would involve a leap from virtual reality to --
telescopes.
But investors hot on the trail of the Next Big Things in
optical networking and wireless communications were
barking up Meade Instruments' (MEAD:Nasdaq -
news - boards) tree Wednesday, pushing the stock of
this binocular-and-telescope concern up 77% to close
at 53.
Naysayers might note that one small lens inside a
complex laser-communications system is the extent of
Meade's connection to this high-speed, wireless,
Internet-access plan, offered by a widely watched, yet
closely held optical-networking outfit called TeraBeam.
An analyst says he doubts Tuesday's announcement of
a contract with TeraBeam portends a change in focus
at Meade, which otherwise hasn't been in the Internet
infrastructure business.
But the dramatic Meade upswing is an apt illustration of
the seemingly boundless investor enthusiasm for
TeraBeam -- or whatever else passes as the Internet's
new frontier on a given day. And it suggests that though
the Nasdaq has been in retreat recently, investors still
can get worked up about something hot in tech -- even
something as slippery as this patch of the sky called
fixed wireless.
What a Week
Though founded in 1997, TeraBeam has been on the
tech scene really only one week. But oh what a week.
On Thursday, the company hired a marquee-name
CEO in AT&T Wireless head Dan Hesse. Hesse, who
was passed over to lead AT&T's (T:NYSE - news -
boards) wireless unit into its pending IPO, was widely
seen as a short-timer, despite the fortune in stock
options that hung in the balance.
On Friday, TeraBeam was featured in a gushing
endorsement from telecom's ultimate tech guru,
George Gilder, in his monthly newsletter.
Finally, Wednesday brought a terse announcement that
TeraBeam had set an original equipment manufacturer
deal, value undisclosed, with Meade.
Analyst Brion Tanous, who follows Meade for First
Security Van Kasper, says he has no reason to
believe the company has changed its focus to
leading-edge optical development from stargazing
equipment.
"I do think there has been a lot of institutional selling
into the retail market on this buzz, though," says
Tanous, who has a strong buy on Meade and a 38 price
target, which the stock smashed through Wednesday
with a gain of 23 1/8 to close at 53. First Security has
no banking ties to Meade.
The Last Mile
As nearly every Internet user knows, the broadband
revolution is generally contained to the big pipes in the
middle of the network, and trickles out at agonizingly
slow speeds through the old copper wires at the user
end, or last mile.
Gilder, whose mere mentions of such Internet
infrastructure makers Terayon (TERN:Nasdaq - news -
boards) and NorthEast Optic Network (NOPT:Nasdaq
- news - boards) sent the stocks flying, said that
TeraBeam's wireless optics "portends the impending
end of the last-mile problems."
According to Gilder and a TeraBeam patent application
dated Jan. 27, TeraBeam bypasses the slower building
access lines by using two-way lasers to broadcast data
through the air between network hubs and satellite
TV-sized dishes in office buildings. By keeping the
optics and losing the fiber, TeraBeam presumably
provides all the broadband capacity of fiber-optic cable
directly to an office network.
"The big advantage to doing this is that it requires no
digging up sidewalks and no right-of-way contracts or
rooftop leasing," says TeraBeam founder and Chairman
Greg Amadon. "So it's quick to deploy. We can install
a system in an hour or two."
At the core of this system is a telescopic and
holographic technology developed by TeraBeam and
Amadon, a Stanford poli-sci grad with no formal
technological training. Amadon says the holographic
lens shrinks the required size of the laser telescope to
6 inches from a meter in length.
Amadon.com?
Amadon, whom Gilder calls a "serial entrepreneur,"
most recently held the CEO title for Virtual i/O, a
virtual-reality-headset manufacturer, based in Seattle,
which went bust in 1997.
Amadon calls the virtual-reality gig the agony in his
journey to ecstasy. "It was before the Net, and the
promise of virtual reality loomed large," he says.
Fortune chose it as one of the coolest companies in
1996, but poor visual quality and a $800 price tag
doomed it to the fate shared by eight-track players and
video phones.
Amadon says the headsets couldn't deliver on the
promise of virtual reality. "It was a product that was too
early and too costly," he says.
Oddly, fixed wireless, as it's called in the industry, also
has been labeled a technology before its time. The
quality of delivering data through the air is entirely
dependent on such things as fog, rain, snow and
swaying buildings. With Seattle as its test market,
Gilder says some of the problems may be ironed out.
Winstar (WCII:Nasdaq - news - boards), Teligent
(TGNT:Nasdaq - news - boards) and NextLink
(NXLK:Nasdaq - news - boards) have put their best
efforts behind beaming data on microwave technology,
but the Street is starting to have its doubts about how
soon they will deliver on their broadband promises.
Gilder says TeraBeam's optical delivery trumps the
microwavers.
More and More
With 140 employees and one customer, TeraBeam has
plans to roll out more service this summer. The
company has no immediate plans to file for an IPO, but
it has received a $27 million investment from an
undisclosed telecom-equipment manufacturer.
Message-board posters speculate the mystery investor
is Motorola (MOT:NYSE - news - boards). Amadon
wouldn't confirm anything.
"There are a lot of rumors flying around," says Amadon.
"And I'm very optimistic we will be announcing
something with a major telecom manufacturer. But
we're not in the position to talk about it now."
TeraBeam's three-year stealth development gives it a
head start on the technology and on setting supply
agreements with key vendors, Amadon says. "As a
consequence, we don't think there will be anyone with a
competitive service product for at least two years," he
says. |
