Wireless Web companies rename, boost projections

Phone.com and Software.com, which recently merged in a $6.4 billion deal, rename the combined company Openwave Systems and boost 2001 revenue projections.

3 min read
Phone.com and Software.com, which recently merged in a $6.4 billion deal, on Monday renamed the combined company Openwave Systems and boosted 2001 revenue projections.

Openwave, which makes software applications for delivering Internet access to mobile phones, other wireless devices and handheld computers, expects revenue of $580 million next year, about 5 percent more than previous forecasts of between $540 million and $560 million. The two companies combined for revenue of $80.8 million last quarter.

In a conference call with analysts, executives said they expect 20 percent to 25 percent sequential quarterly revenue growth in the current quarter, and 15 percent thereafter.

Openwave expects it will be profitable sooner, now in March 2001 rather than December 2001, as a result of the merger.

"Our goal is to become the world's foremost software company providing communications service providers," said Openwave chief financial officer Alan Black.

Wireless Internet access is expected to be an explosive business over the next several years as mobile phones and other wireless technologies proliferate with consumers and business users. Openwave is developing many of the behind-the-scenes technologies for use by wireless carriers, enabling them to tap into what is expected to be a source of higher profit margins.

Wireless Internet access, though it has faced many challenges to date, is expected to expand when high-speed, always-on wireless connections become commonplace via third-generation, or "3G," wireless technologies.

Phone.com and Software.com, which completed their merger last week, said their new company name was generated by Lexicon, the same company that came up with technology names such as PowerBook and Java.

"It was a merger of equals, and if we chose one name, the other would feel slighted. Phone.com is too narrow and Software.com is too generic," Black said. "The brand recognition will take a little time, but it won't be long before everyone refers to us as Openwave. Time will tell."

The marriage of Phone.com's microbrowser for cellular phones and Software.com's back-end software and applications was intended to give the combined company a broader set of products and services with which to sell communications service providers. The deal, according to executives, was "all about getting big fast," but it's not Phone.com's first significant acquisition. Earlier in the year, Phone.com acquired universal messaging company Onebox.com for about $850 million.

Openwave, which competes against the likes of Nokia, Ericsson and Converse Technologies, among others, will trade on the Nasdaq Stock Market under the ticker symbol "OPWV." Shares in the company fell more than 9 percent to $79.69 by market close Monday, in what was a down day for many stocks.

Analysts predict wireless communications companies could spend as much as $2 billion on software needs in 2001. "We continue to believe that Phone.com is one of the best-positioned companies to benefit from the (spending) targeted at building the wireless data infrastructure," Matt Finick, an equity analyst at Thomas Weisel Partners, said in a recent report.

Executives said they expect to grow from 2,000 employees to 3,000 next year.

Openwave also will be selling its software and services via a direct sales force for the first time, rather than through indirect sales channels, executives said.