The top three executives of Metrocall Inc. convened a teleconference for journalists, analysts and stockholders Jan. 3 that they said was intended largely to dispel widespread rumors of a top-level management shake-up.
Metrocall officers consider the rumors, which Chief Executive Officer Christopher Kidd vehemently denied, to be a primary factor in depressing the price of the company’s stock, which closed at $18.69 on Jan. 2. In early October, Metrocall commenced a public offering of four million shares of its common stock at a price of $28.25.
Last August, Metrocall’s board of directors voted to remove its board chairman, Harry L. Brock Jr., from his post as company president. Brock subsequently sued for reinstatement, and then dropped his lawsuit in early September. Kidd, as CEO, is fulfilling the duties of president, and Brock retains his title as board chairman.
In response to a query over whether there exists a split board and management team, Kidd offered this response: “Harry Brock continues to fulfill his role as board chairman. He is not involved in day-to-day operations, but is always available for consultation,” he said. “The board of directors continues to guide the company. Management reports to the board and to committees of the board. Our operations strategies represent a consensus of the board. Once decisions are made, the board speaks clearly and there is no confusion at all.”
Kidd added that a divided board and executive management team could not have achieved positive fourth-quarter results, including the addition of 63,000 units for the nationwide paging and wireless messaging service provider, based in Alexandria, Va.
“A lot of the misinformation and partial information may be due to the fact that we’ve been quiet on the mergers and acquisitions front,” said Vincent Kelly, chief financial officer. “But we finished this quarter with the best subscriber addition in our history.”
Metrocall also is paying the short-run price for its decision to go from a medium-size to a large company, Kidd said. Adding new subscribers and additional sales and sales support staff in the fourth quarter will pay off in 1996, he predicted, although it imposes a short-term spike in expenses.
Audited year-end financial statements won’t be completed and released until mid-February. However, Stephen Jacoby, chief operating officer, said Metrocall finished 1995 with $273 million in equity and $25 million in net year-end debt.
“The market rewards acquisitions instead of internal growth to gain market share,” Kidd said. However, despite the fact that the company is sitting on a lot of cash, he said consideration of a stock buy-back program would be premature, given the large marketplace looking to consolidate.
No firm plans exist for other acquisitions. However, Metrocall has targeted markets in the Carolinas, Georgia and in sections of Arizona and Utah as part of its overall strategy. While the company has enough cash on hand to finance most of its activities, any significant acquisition could also necessitate an additional stock offering, Kidd said.
Jacoby also attributed the dip in Metrocall’s stock price to the problem it has had since August in getting timely delivery of new generations of pagers from its supplier, Motorola, Inc. “Right now, our fill rate averages about 90 percent overall,” he said. “Motorola tells us the problem will be rectified by the end of the first quarter, with fixed delivery dates.”
