WESTBOROUGH, Mass.-The nation’s No. 1 independent paging and messaging carrier Arch Wireless Inc. reported a net income of $5.2 million on revenues of $154 million for its second quarter, news that sent the carrier’s stock up more than 11 percent to $10 per share.
“We are pleased with the operating results for the second quarter as we continued to reduce operating expenses and maintain operating margins,” said C. Edward Baker, the carrier’s chairman and chief executive officer.
Arch reported a net decline of 389,000 messaging units in service. The carrier’s customer base dropped to 4.8 million. Arch also reaffirmed previous 2003 revenue guidance of $580 million to $600 million.
“It has been an interesting industry over the past several years,” said Roy Pottle, Arch’s executive vice president and chief financial officer, in a recent interview with RCR Wireless News. “The opportunity for value creation is much better than it’s ever been.”
Pottle said the paging and messaging industry is finally stabilizing after years of massive declines. He said much of Arch’s commercial customers have left the network in search of mobile-phone services, but that many of the carrier’s remaining enterprise customers are sticking around. Pottle said paging services fit perfectly with those enterprise customer needs.
However, Pottle admitted that the paging and messaging industry placed too much hope in two-way paging, which has not panned out as the industry expected. Indeed, in Arch’s second quarter, the carrier lost 373,000 one-way paging units as well as and 16,000 two-way messaging units.
“There was an expectation that there would be more growth than there has been,” Pottle said. “It has not been as strong a growth as anticipated.”
But Pottle said Arch has trimmed its operations and expenses to account for the decline, and is in a much more stable position. Further, Pottle said warnings in the company’s recent Securities and Exchange Commission filings about another possible bankruptcy were standard investor warnings and not an indication of upcoming events.
The conditions for bankruptcy “do not exist. There’s no evidence that those conditions exist,” he said.
Indeed, Pottle said Arch will remain a competitive player, and that any potential consolidation in the paging and messaging industry will likely include Arch.
Consolidation “is something we look at on a day-to-day basis,” he said. “It is certainly part of our landscape.”
