Opinion
What Backdating?
By Monica Alleven
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| Alltel Wireless (AT) shares were up more than 2% on Tuesday, trading at $60.21, amid growing talk that the company is putting itself on the market. Elsewhere, the Associated Press reported that Alltel is cutting 150 positions from the Midwest Wireless payroll. Alltel acquired Midwest Wireless last year. |
It looks as though Research in Motion (RIM) can do no wrong, at least in the eyes of some investors. Even after the company admitted to accounting errors over backdating stock options, its shares were trading up, at $136.64, at one point on Thursday.
If this were any other company, I might be surprised. Often when company officials reveal the magnitude of their woes, the stock takes a hit. But this being RIM, a darling of the enterprise sector and contender in the consumer sector with the Pearl, it's not that surprising. Perhaps it was how company executives framed their 8-page (or more, depending on your font size) status update on the whole matter.
The status update, or public confession if you will, didn't look good. "In many instances … hindsight was used to select grant dates with favorable pricing on grants, resulting in grantees receiving an in-the-money benefit that was not recorded in the financial statements as stock-based compensation," the company said.
Clearly, some folks have to be held accountable. It's kind of like picking the winners after the horse race. Indeed, Chairman and co-CEO Jim Balsillie has publicly owned up to the mistakes, which goes a long way in the goodwill department but still leaves some questions unanswered - such as, how could someone not know backdating goes against U.S. accounting rules and plain-old common sense? I realize company executives are trying to make up for their mistakes, but I'm not sure it's enough.
The company's press release mentions that Balsillie advised the special investigating committee that options grants were made to attract and retain skilled personnel in an intensely competitive environment, and the informality of the option granting process was, in part, a reflection of the stage of the company's development and its rapid growth. That might be one explanation, but it also sounds a little like an excuse.
One thing the restated numbers won't change is RIM's subscriber growth trajectory. In its most recent public statement, RIM reported that it added about 875,000 BlackBerry subscriber accounts in the third fiscal quarter. At the end of that quarter, the total BlackBerry subscriber base was about 7 million. Revenue was $835.1 million, up 26.8 percent from $658.5 million in the prior quarter and up a whopping 49% from $560.6 million in the same quarter a year ago.
Balsillie, who stepped down from the role of chairman but continues as co-CEO and director, and co-CEO Mike Lazaridis each offered to kick in up to $5 million (Canadian) to help defray the costs incurred with the company's review and financial restatements. That should help to some extent. But it doesn't change the fact that backdating is just wrong, and it's hard, from my vantage point, to understand how anyone could get that confused.
Comments? E-mail me at: monica.alleven@advantagemedia.com.
Clearwire Sizes Up IPO
By Monica Alleven
Clearwire's shares opened up, then settled down to $24.95 at mid-day Eastern time Thursday after the company's initial public offering (IPO) Wednesday, which raised $600 million.
Clearwire, founded in 2003 by cellular pioneer Craig McCaw, represented one of the most actively traded Nasdaq stocks this week, according to reports. Shares were sold at the high end of the forecast range of $23 to $25. The shares trade under the symbol CLWR.
The company says it now offers its pre-WiMAX service in 35 metro markets, covering more than 350 municipalities in Alaska, California, Florida, Hawaii, Idaho, Minnesota, Nevada, North Carolina, Oregon, Texas, Washington and Wisconsin in the United States, as well as Ireland, Belgium and Denmark.
Clearwire isn't the only wireless company to pursue an IPO of late. Starent Networks announced it has filed a registration statement with the U.S. Securities and Exchange Commission (SEC) for a proposed IPO. Last year, Aruba Networks filed with the SEC for an IPO as well. The dates for those offerings have not yet been announced.
Nokia Realigns N.A. Operations
By Monica Alleven
Nokia is realigning its North American sales and marketing division with the aim to build a more channel-focused organization.
The company is redefining the roles of its device sales teams for North America and relocating most sales support people from Irving, Texas, to Nokia's corporate facilities in White Plains, N.Y.
As part of the changes, Mark Louison, the current head of Nokia's networks business in North America, was appointed to head Nokia's device business as of July 1. As of April 1, Louison also will become president of Nokia Inc., the North American arm of the Finnish company. After the realignment and relocation is complete near the end of June, Tim Eckersley, the current head of Nokia's device sales in North America, will leave his position. His future plans will be announced at a later date, the company says.
In other Nokia news, the company globally is getting more involved in the mobile advertising business. The company is offering Nokia Ad Service, a managed service for advertisers to conduct targeted advertising on mobile services and applications. Nokia also introduced Nokia Advertising Connector, a private label service for third party publishers and advertising aggregators that want to extend into the mobile world.
It's a bold move as the market becomes more competitive from the platform and provisioning side of the equation, notes Eden Zoller, principal analyst at Ovum. "There are a lot of partners for the advertising community to choose from and Nokia will have to fight to stand out from the crowd," Zoller says. "In Nokia's favor is the fact that it is well on the way to becoming a Web 2.0 service provider."
Some mobile operators may be uncomfortable because Nokia wants to place itself at the center of a mobile advertising community that it controls in terms of provisioning and, presumably, revenue flows, Zoller goes on to say. "Nokia might seem a friendlier, more familiar entity than the likes of Google and has more clout than some of the pure play mobile specialists given its strong relationship with many operators. Then again, there is no reason why it should not partner with the pure play specialists here."
Nokia says it has completed a number of pilot campaigns with advertisers and mobile publishers. Nokia Ad Service began operations in Europe this week, with a global launch expected in the second half of this year. Nokia Advertising Connector will run several pilots during the coming months and is expected to become commercially available by the end of the year.
Boards Play Musical Chairs
By Monica Alleven
It's that time of year for setting annual meetings and reviewing board members. In Motorola's case, it's trying to keep someone off its board.
The company's filing with the Securities and Exchange Commission (SEC) giving notice of its annual meeting of stockholders, to be held May 7, cautions that Carl Icahn is not welcome to the board. Motorola received notice from certain affiliates of Icahn for a nomination to the board. The board is urging stockholders not to sign any proxy cards sent to them by the Icahn affiliates.
Media reports about Icahn have said he wants to increase shareholder value of the company. In a letter to Business Week, Icahn explains that shareholder activists like himself add value for all shareholders. Private equity investors, on the other hand, keep most of the profits for themselves when they take over. He says a study of all his investments since November 2004 shows an increase in total shareholder value in excess of $55 billion.
Motorola, in its letter to shareholders, has other nominations in mind. David Dorman, retired CEO of AT&T and currently senior adviser and partner at Warburg Pincus, is one nominee.
Elsewhere, rival handset maker Nokia also is making changes to its board. Ahead of its annual meeting on May 3, Nokia announced that Paul Collins, vice chairman of the board, turned 70 and therefore won't stand for re-election. The company's nomination committee is proposing the following be re-elected: Georg Ehrnrooth, Daniel Hesse, Bengt Holmstrom, Per Karlsson, Jorma Ollila, Dame Marjorie Scardino, Keijo Suila and Vesa Vainio.
The committee also will propose that Lalita Gupte, Henning Kagermann and Nokia President and CEO Olli-Pekka Kallasvuo be elected as new members of the board.
On the carrier front, former FCC chairman Bill Kennard resigned from Sprint Nextel's board effective March 1. He joined the Nextel Communications board in 2001 and is a managing director in the global telecommunications and media group of The Carlyle Group.
Sierra Wireless to Acquire AirLink
By Monica Alleven
Sierra Wireless plans to acquire AirLink Communications, a privately held supplier of mobile wireless data solutions for public safety and industrial applications.
For Sierra Wireless, the acquisition is consistent with its strategy of renewing and strengthening its emphasis on higher gross margin products and solutions, CEO and President Jason Cohenour said in a press release. The transaction is valued at $27 million in cash and stock.
For AirLink, the deal gives it access to global distribution channels, new technology, large-scale manufacturing and supply chain capabilities and working capital to drive growth, according to CEO Andrew Berman in the release. Once the deal closes by the end of June, Berman will become the senior vice president and general manager of the Sierra Wireless Mobile and M2M business segment. Cohenour will remain as president and CEO.
AirLink, with headquarters in Hayward, Calif., has 50 full-time employees. The combined company will have headquarters in Sierra Wireless' hometown of Richmond, British Columbia.
Yahoo! Goes Gamma for Windows
By Monica Alleven
Yahoo! is making the gamma version of Yahoo! Go for Mobile 2.0 available on Windows Mobile powered devices.
Yahoo says the service will be supported by more then 175 mobile phone models, including more than 100 models available now. Consumers can check device availability at http://go.yahoo.com.
According to Yahoo, consumers have been "clamoring" for it to bring Yahoo! Go 2.0 to Windows Mobile devices since it launched the service less than two months ago. The Go 2.0 service includes features that help people access their favorite Internet content, including search functions and headlines.
Yahoo also announced a partnership with High Tech Computer (HTC) to preload Yahoo services, including Go 2.0, on millions of HTC devices. The company expects Yahoo! Go 2.0 to be supported on select Windows Mobile powered devices from other leading device manufacturers as well.
Briefs... Week in Review E-newsletter... March 09, 2007
• Is it up or is it down? Shares in Palm were up trading at $17.31 at one point early this week after a Wall Street Journal report saying it had hired Morgan Stanley to review its strategic initiatives including a possible sale. By the end of the day on Wednesday, the stock was down. On Tuesday, Palm said it is increasing its commitment in China by cooperating with China Mobile Communications, establishing a research and development center in the Asia Pacific region and launching a new Palm Treo 680 smartphone in China.
• Qualcomm reports that the worldwide community of BREW publishers and developers has now earned more than $1 billion from the sale of BREW applications and services since the first commercial deployment of BREW services in November 2001.
• Time Warner Cable and Sprint announced the launch of Mobile Access in the Cincinnati-Dayton region of Ohio. Mobile Access integrates Time Warner Cable's Digital Telephone, Digital Cable and Road Runner products with Sprint's wireless service.
• Alaska Communications Systems Group announced further expansion of its CDMA mobile wireless voice and data network in Wrangell in southeastern Alaska. The company also announced the expansion of EV-DO service across the North Slope.
• Networks In Motion moved its headquarters from Irvine, Calif., to Aliso Viejo, Calif., to accommodate its growing staff hired to handle the company's new product development and expansion into Europe.
• AT&T expanded its global Wi-Fi footprint for business customers, adding 13,000 hot spots around the world where mobile workers can link to their corporate networks. The new hot spots, available to AT&T Remote Access customers, include airports, hotels and restaurants. The carrier also announced that it has enhanced its Global Network Client, the software used by mobile workers to access their company's VPNs, with streamlined log-ons and new security features from Wi-Fi locations.
That's not all from AT&T, however. The company announced that AT&T Homezone customers can now manage their television recordings via wireless handsets. The AT&T Homezone service integrates AT&T Yahoo! High Speed Internet, AT&T DISH Network satellite television and AT&T Home Networking services via a single set-top device.
• Alcatel-Lucent reports it has successfully conducted the first live field trials of EDGE technology in Bangladesh on TM International Limited's commercial GSM 900 MHz and 1800 MHz network.
• Wirefly, the comparison shopping site for cell phones and wireless phone plans, says sales of smartphones grew 70% from the third quarter of 2006 to the first quarter of 2007. The company attributes the increase to two main factors: The public's awareness of smartphones generated by frequent national advertising programs and increased choice for smartphones that are thinner, more stylish and have more compelling features such as music players. Samsung's BlackJack tops the list as Wirefly's top-selling smartphone.
• SS8 Networks says its Xcipio Platform was selected to enhance Lawful Intercept (LI) capabilities for San Antonio, Texas-based Pocket Communications. Pocket will use SS8's Xcipio Platform in its 3G wireless networks in San Antonio and Laredo, Texas, to exceed federal requirements under the FCC's Communications Assistance for Law Enforcement Agencies (CALEA) Act.
• Gemini Mobile Technologies, developer of wireless software infrastructure, raised $20 million from Goldman Sachs. Goldman Sachs joins Gemini's current investors, three Japanese financial institutions Mitsubishi-UFJ, Mizuho and Tokyo Marine.
• TriQuint Semiconductor says it has shipped more than 50 million of the world's smallest quad-band GSM/GPRS transmit modules to wireless device manufacturers in China and Korea.