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OmniSky losing its orbit

Investors are beating shares of the wireless Internet company further earthward after the company failed to deliver its third-quarter earnings report.

Wireless Internet service company OmniSky is barred from issuing any new shares of its stock after failing to file a third-quarter financial report, the struggling company announced Wednesday.

Shares of OmniSky stock were still trading Wednesday, however, and investors were beating the price further earthward. By midday, the value of company shares hovered at about 20 cents each.

OmniSky wasn't answering calls at its San Francisco headquarters on Wednesday. A statement attributed to the company gave no indication why it wasn't able to file its financial paperwork, or when it would.

OmniSky was supposed to file its third-quarter report last week, but the company asked securities officials for more time. In a statement issued then, OmniSky Chief Executive Patrick McVeigh gave a dour outlook for the company's future.

"We continue to actively consider all available options to preserve and enhance our assets for our shareholders and other stakeholders, although our outlook has, unfortunately, been adversely affected by the continued deterioration in the capital markets since September 11," McVeigh said in a statement.

"We are also evaluating the potential benefits of a reorganization, sale or other form of restructuring under the federal bankruptcy code," he said in the statement.

OmniSky is a wireless service provider with about 42,000 subscribers that pay a monthly subscription fee. The company has nationwide coverage, mainly through an agreement to use AT&T Wireless' network. Subscribers generally use the service to get wireless Internet access for their personal digital assistants. The company says on its Web site that it supports devices from Palm, Handspring, Casio, Hewlett-Packard and Compaq Computer.

Analysts say OmniSky's travails mirror the ongoing shakeout in the wireless provider market. There have been several recent high-profile failures, and resurrections. The remnants of the Ricochet wireless network have been bought out of bankruptcy court by Denver-based Aerie Networks, which said it will relaunch the service within the next couple months. MobileStar, which provided wireless service for Starbucks cafes and dozens of hotels, shut down for a month before it got a fresh cash infusion from VoiceStream Wireless.

OmniSky acknowledged its financial troubles earlier this month, when it retained Bear Stearns & Co. as a financial adviser and announced it was laying off 100 people as part of an effort to cut $20 million off its budget.

The cutback came a month after the company reported second-quarter revenues of $5.4 million, or a loss of 38 cents per share. That beat an estimate by First Call analysts that predicted a loss of 63 cents per share.

In September, the company paired with America Online to offer "OmniSky for AOL," which would give AOL members access to their e-mail and instant messages. But analysts from various firms, including Lehman Brothers, said the deal failed to attract enough subscribers to lift OmniSky's fortunes.

That relationship still is ongoing, according to an AOL representative.