The fate of wireless enterprise company GoAmerica Inc. is unclear, and industry watchers have little faith that the company’s destiny is a bright one.
“I don’t really know what they bring to the table,” said Michael King, senior analyst with Gartner Inc. “I do wonder who would really want them.”
“They are in a difficult spot,” said Isaac Ro, a senior analyst for mobile and wireless technologies with research and consulting firm Aberdeen Group.
GoAmerica earlier this month postponed its quarterly conference call to “explore strategic opportunities that may enhance the company’s liquidity and revenue potential.” The company said it is working with an outside advisor to review its financial opportunities, and “due to the status of this initiative, GoAmerica will be postponing its conference call until a more appropriate time.” GoAmerica declined to provide further details.
Such a delay usually precedes some kind of major transaction, such as a merger or acquisition. Indeed, fellow wireless services company OmniSky Corp. also delayed its filings shortly before Internet service provider EarthLink acquired the company out of bankruptcy in late 2001. Interestingly, EarthLink also last year signed an extensive deal with GoAmerica to purchase much of its subscriber base and manage its network access, equipment, billing and support functions.
Gartner’s King said GoAmerica could be scooped up in a similar purchase, but the list of potential buyers is relatively short.
“It could very likely be a carrier,” King said. “Or it could be one of the big service bureau guys.”
King said T-Mobile USA Inc. is the most probable carrier to purchase GoAmerica and would do so to bolster its business offerings. Larger technology companies, such as IBM Corp. and EDS, may also consider buying GoAmerica to further their wireless services.
However, Aberdeen Group’s Ro said the probability of a company acquiring GoAmerica is relatively low.
“I’m not convinced that there’s that much to buy,” he said.
GoAmerica placed much of its hopes on slower-speed data networks like CDPD, Ro said. However, the industry’s two main CDPD operators, AT&T Wireless Services Inc. and Verizon Wireless, plan to shut down those networks in the coming years, leaving GoAmerica few options. The company worked to become a value-added data reseller, much like wireless data carrier Motient Corp., but has met with little success. Indeed, the company last week said it scored an additional 90-day grace period to remain on the Nasdaq stock listing, but warned there is no guarantee it will meet Nasdaq’s minimum $1 share price requirements.
Because few companies would likely be interested in acquiring GoAmerica, Ro said another possible reason for the delayed conference call could be a new partnership with a national carrier. Possible candidates for such a partnership include T-Mobile and Cingular Wireless, which could team with GoAmerica to improve their business offerings.
“If I had to guess, they’d have a deal with a national operator,” Ro said.
Other possible scenarios involve GoAmerica filing for Chapter 11 bankruptcy. If that happens, the company could represent a more attractive purchase because it would likely shed much of its $259 million in debt while in bankruptcy.
GoAmerica is not alone in its struggles. Many wireless enterprise players have been forced to sell, file for bankruptcy or quietly shut down. Indeed, Nokia Corp. recently picked up wireless enterprise company Eizel Technologies, further consolidating the tight space. While stalwarts like IBM continue to sell wireless services to businesses, smaller wireless companies are suffering through the contracting economy.
“It’s not taking off as fast as everyone expected it to,” King said of the wireless enterprise market. “People are still investing very, very carefully here.”
GoAmerica’s recent quarterly filing with the Securities and Exchange Commission highlights those difficulties.
“Over the past 12 months, our available cash has decreased substantially,” the company said. “We have decided to retain an outside advisor to assist us in analyzing various steps that we may take to enhance our liquidity. Such steps may include the sale or other disposition of certain of our assets and the redeployment of the net proceeds in aspects of our business, which we believe are well positioned for revenue generation and growth. We cannot assure you as to when or whether such steps will be taken and, if taken, whether such steps will be successful.”
The firm also said it ended last month with $2 million in cash and cash equivalents, and its business plan for the year calls for further job cuts and expense reductions. The company said it has enough cash to continue operations only for the next few months.
“For us to remain in business beyond such four-month period, we will likely require additional financing,” the company said. “At this time, we do not have any bank credit facility or other working capital credit line under which we may borrow funds for working capital or other general corporate purposes. We may not be able to raise funds on terms favorable to us, or at all. As a result of these and related considerations, our independent auditors have issued a going concern opinion in connection with our 2002 financial statements.”
