DALLAS-WebLink Wireless Inc.’s stocks dropped almost 50 percent last week after the company released its fourth-quarter results, which included a huge drops in sales, dire warnings for the year to come and 125 layoffs.
WebLink said it lost $3.7 million in earnings for the fourth quarter and that its traditional paging business saw a $6.3 million drop in sales over the course of three months, from $14.4 million in the third quarter to $8.1 million in the fourth quarter. WebLink’s wireless data division, on which the company is placing its future hopes, had a 221-percent annualized growth in subscriber units but still reported a loss of $11.7 million due to start-up technical and marketing costs.
In its release, WebLink said it was realigning its sales channel, a move that included eliminating 125 positions-about 7 percent of the company’s work force-and closing 17 sales offices. The company said the layoffs were part of an effort to decrease the size of its field sales organization and increase resources in national account sales, reseller sales and on-line sales. Company executives said the realignment would cost about $2 million.
News of the layoffs eclipsed the more dire warnings about the company’s future. WebLink said it needs an additional $70 million in capital by the second quarter of this year to be fully funded for the year. If the money doesn’t come, WebLink will have “liquidity difficulties and its business and financial condition would be materially adversely affected,” the company said in a statement.
The announcement comes just a few months after WebLink said it amended its credit facility to allow the company to borrow up to $80 million-money the company said would keep it funded through this year. However, money from the amended credit facility was quickly spent on interest for WebLink’s 15 percent senior discount exchange notes.
WebLink said it hopes to raise the needed $70 million through private placement of debt and possibly moving preferred or common stock to strategic or financial investors.
WebLink’s announcements last week came on the heels of news that the company may be booted off its Nasdaq National Market listing because its stock is below $5 per share. WebLink said if it was forced off the national market it would move to the Nasdaq SmallCap Market listing.
John D. Beletic, the company’s chairman and chief executive officer, said in a conference call that WebLink’s troubles were comparable to those of its competitors, including Motient, Metricom, OmniSky and Arch Wireless Inc. On Feb. 16, Arch said it too may lose its place on the Nasdaq national market due to low stock prices.
WebLink stock was trading at about $1 after the news
