Metricom fire sale this week
The company's assets could be sold for as little as $30 million at a bankruptcy auction later this week, according to new court filings.
The $30 million figure is the minimum bid set by Metricom attorneys to buy all of the company's assets, which includes the pole-top radios that powered its now-shuttered Ricochet wireless service in 17 cities and the more than 70 patents the company was awarded. That price tag does not include radio spectrum licenses, however.
Bidders at the Thursday auction at Metricom offices in San Jose, Calif., will have to pay extra for those licenses granted by the Federal Communications Commission. The company set the minimum bid at $50 million for those airwaves, according to the new court records.
Metricom spent $1 billion to build its high-speed wireless network. If no one buys the whole assets for $30 million, pieces will be sold individually. For example, the company hopes to sell network operating centers for a minimum of $5 million; the patents will cost a minimum of $5 million, according to the court records.
The furniture and fixtures at Metricom's offices also will be sold. The entire lot will go for a minimum bid of $1 million.
Both Metricom executives and attorneys involved with the company's bankruptcy auction wouldn't offer comment on the sale. Most Metricom employees have been laid off, except for a skeleton crew in charge of dismantling and powering down the network.
The auction should provide some direction as to the future of the Ricochet service, which was much loved by its 51,000 subscribers for delivering wireless access at twice the speed of a dial-up connection.
But love doesn't equal cash. The company ultimately collapsed because it was able to attract only 51,000 customers, which did not provide enough revenue to keep it going. It filed for bankruptcy protection after failing to find a buyer, according to sources.
Some customers hope a single buyer will come in, purchase the entire network of equipment, and restart the service. They've already come up with a name--R2, for Ricochet 2.
"There's hope for an R2," said Metricom devotee and investor DeeDee McGann.
There is some precedent for that scenario. Satellite phone company Iridium failed to create a global mobile phone service for mass-market consumers. The $5 billion, 66-satellite system was auctioned off, a fire sale that garnered $25 million for creditors. The new owners have restarted the network with less lofty goals of being used by the military or government.
The similarities between Iridium and Metricom don't end just in bankruptcy court. Iridium was started by Motorola as a way to enter the satellite phone business. Iridium sued Motorola in a New York court in late July, alleging that bad business decisions by the handset maker forced Iridium to lose $4.3 billion. Motorola denied any wrongdoing.
When noting what is and isn't for sale on Thursday, Metricom said proceeds of any legal victories, including any against its chief investor, WorldCom, aren't on the auction block. WorldCom, which came under fire for not pushing harder to resell the service, denies any wrongdoing. The company is also Metricom's biggest creditor, claiming it's owed $355 million.
WorldCom was one of two chief investors in the company. The other was Vulcan Ventures, the venture capital firm founded by Microsoft co-founder Paul Allen.