CNDS doing very well on strong volume, good company in a growing sector.
CellNet Data Systems Chairman Bullish on Future
Seidl Tells Stockholders Market Achieving Critical Mass
REDWOOD CITY, Calif., May 6 /PRNewswire/ -- CellNet Data Systems, Inc. (Nasdaq: CNDS - news) chairman of the board, John M. ''Mick'' Seidl, told stockholders at the Company's annual meeting that he is, ''more bullish than ever on CellNet's future, as the market for CellNet technology is showing all the signs of achieving critical mass.''
Seidl cited CellNet's fast growing networks, contract backlog and the rapid adoption of its technology as strong evidence of the market's development. ''Today, CellNet has more than 2.2 million devices, primarily utility meters, online in its networks. We continue to bring online more than 100,000 additional devices per month, a pace that we expect to pick up as the year progresses. We expect to have close to 4.0 million utility meters online in our networks by year-end 1999. There is no doubt that CellNet technology is fully commercialized and deployed in a scale that significantly leads the burgeoning telemetry industry.
''CellNet now has 4.3 million meters under 15- to 20-year long-term contracts with some of the top utilities in the Midwest, Pacific Northwest and in New England, with an additional agreement to add a potential 500,000 meters in the Southwest. And last week we began working with Schlumberger to finalize a contract to provide a network for PECO Energy Company to serve 2.0 million customers in the Northeast. If you add up all of the meters under these contracts and other various agreements, CellNet is looking at a growing 'book' of close to 7.0 million meters, which represents more than four percent penetration of the U.S. electric and gas meter market.''
''In addition, CellNet also has what we refer to as a growing 'shadow book' of approximately three million additional meters representing potential network expansions,'' Seidl continued. ''This shadow book number refers to meters that are within the service territories of our current utility customers, but are not yet under the existing network contract to CellNet. We believe that, given our recent track record of network expansions at three of our major network customers, we have an excellent opportunity to bring these three million meters under contract as well. The expansions of CellNet's contracts at Puget Sound Energy, Kansas City Power & Light, and AmerenUE for more than 750,000 meters are also testimony to the benefits of CellNet technology. There is nothing more important or validating than satisfied customers.''
Seidl told stockholders that BCN Data Systems, CellNet's 50/50 joint venture with Bechtel Enterprises, is poised to enter the U.K. market in 1999, where BCN is in negotiations with several large regional utilities and hopes to conclude its first network contract by year's end. He added that CellNet has established a new business unit, led by CellNet co-founder and vice president, Larsh Johnson, to more rapidly develop its Commercial Data Services businesses, which is expected to generate its first revenues in 1999, and its first significant revenues in 2000.
Seidl also reaffirmed CellNet's commitment to ''minding the till'' by controlling and cutting costs. The single most important element of these efforts has been to ''de-capitalize'' or cut CellNet's capital expenditures for future network deployments by more than half in order to improve returns, and to lower financial risk and capital requirements. CellNet intends to accomplish this by working with strategic alliance partners and network customers to assume various network component costs where it makes sense. Seidl noted that approximately one-third of CellNet's total meter commitments are already under such ''de-capitalized'' agreements. In separate cost reduction actions, CellNet has also reduced key network operating expenses and research and development requirements, recently completed a work force reduction, and has been working to consolidate its offices and other operations facilities where possible.
Finally, Seidl underscored the potential of CellNet's recent Internet initiatives to the Company's future. Key to these initiatives is CellNet's new Internet service MyHomeLink.com that will enable utilities to deliver millions of U.S. residential customers a broad range of Internet services, including energy consumption data, online bill presentation and payment, as well as localized classifieds, banking services, community messaging and a host of e-commerce opportunities through customizable web sites. MyHomeLink.com will also provide utilities and their customers with the functionality to interface with a two-way thermostat or home management systems and other electrical, gas and water devices that communicate directly with the utility using the CellNet network as a low-cost gateway to the home (see www.MyHomeLink.com).
Next week, Seidl will turn over his responsibilities as president and CEO to John T. LaMacchia, who joins CellNet from Cincinnati Bell Inc., where he most recently served as chief executive officer. Seidl remains chairman of the board, and will remain active in the Company, focusing his efforts on forming strategic alliances, network customer relations, developing international business with BCN and corporate governance.
The Company
CellNet Data Systems, Inc. is an industry pioneer and leading provider of low-cost ''telemetry services'' -- defined as the ability to transmit and receive data for the remote monitoring and control of devices. CellNet networks are the largest and fastest-growing of their kind in the world, providing connectivity for millions of devices in the energy industry and other Commercial Data Service markets. For more Company information visit cellnet.com.
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