Metro One Telecommunications Inc. opened trading on the Nasdaq National Market at $8.50 per share in its initial public offering of 2.4 million shares of common stock, of which the company is selling about 1.68 million shares and existing shareholders are selling 725,000 shares.
The initial stock offering was made through the Beaverton, Ore., company’s prospectus. Metro One develops and provides enhanced directory assistance services to wireless carriers.
Proceeds from the stock sale will be used for working capital and other corporate purposes, said Metro One. About $3 million will fund equipment replacement for existing call centers and about $300,000 will be used to expand sales and marketing efforts. Prior to the end of 1997, Metro One expects to spend about $2.8 million on equipment to build at least four new call centers.
The company was founded in 1989 by Russ Davis, Kevin Anderson and Patrick Cox and established its first EDA call center in Portland that year. Other call centers serve Baltimore/Washington D.C., Chicago, Denver, Detroit, Miami, Minneapolis, Philadelphia, Phoenix, San Diego and Seattle. Contracts are out to provide services to St. Louis and Milwaukee.
Metro One’s clients include Ameritech Cellular Services, AT&T Wireless Services Inc., Bell Atlantic Nynex Mobile, BellSouth Cellular, GTE Mobilnet Inc. and U S West NewVector Group.
Among risk factors associated with the public offering are the company’s short time in operation; its need for expansion to sustain profitability; expiration of multiyear client contracts with no guarantees for renewals; limited customer base (because only two cellular carriers operate in each market); concentration of business, as only three carriers are responsible for 72 percent of the company’s revenue; rapidly changing telecommunications market; intensifying competition; technological change; and potential change in regulation.
Metro One’s history of financial loss also is listed as a risk factor. However, the company finished the six months ended June 30 with $727,000 net income, compared with a loss of nearly $1.3 million for the comparable period a year earlier. For the second quarter, Metro One reported its net income reached $442,000, compared with a loss of $364,000 in the second quarter 1995. Second quarter revenues totaled $4.5 million, a 50 percent increase from $3 million at the end of June last year.
Metro One said its directory assistance service is personal and easy-to-use. In addition to furnishing phone numbers to subscribers, the company offers to directly connect the caller to the number being called, and provides categorical searches and local event information. Metro One’s StarBack feature allows a subscriber to return to an operator at any time during a call, said the company.
Underwriters for the offering are Black & Company Inc. of Portland, Ore., and Cruttenden Roth Inc. of Irvine, Calif.
