I can smell it.
Nextel Close to Deal With
eDispatch
by Adam Peeler
adam@stockgroup.com
February 8, 2000
Wireless giant Nextel Communications Inc.
(NASDAQ: NXTL) is expected to sign a deal with small cap
equipment provider
eDispatch (CDNX:
EWD) by the end of the
month, a Nextel
spokesman said today.
"We haven't announced
anything with eDispatch
but they're really the only one out there," said Nextel's
investor relations manager Paul Blalock. "We're getting close
to an announcement, there'll probably be something at the
Wireless 2000 conference at the end of February."
The sixth largest wireless service provider in the United
States stopped short of announcing the deal Friday with
eDispatch.com (CDNX: EWD) and this week, investors
showed their disappointment by driving the stock down 55
cents below Friday's close of $12.50.
But both the Nextel spokesman and an analyst indicated
today that it's only a matter of time before eDispatch signs a
deal to supply the $33 billion Nextel Communications Inc.
with its wireless dispatching technology.
On Friday, eDispatch announced it signed an evaluation
agreement with Nextel. Rob Millham, a high tech analyst
who covers eDispatch says it's all part of the courtship
process.
"The fact that the arrangement is an evaluation agreement
and not a commercial agreement is a disappointment to the
market but it shouldn't be," said Millham. He has revised his
target for eDispatch from $C4 in November to $C7 in January,
and now to $C15.
At mid-day today, eDispatch was trading at $C11.75, off
$C0.40. It has ranged from a high of $C15 to a low of $C0.50.
"While the term `evaluation agreement' may suggest only a
tentative arrangement, we believe there is much more
substance to this announcement than meets the eye,"
Milham added.
eDispatch is one of two publicly traded companies, the other
being Mobile Data Solutions Inc. (NASDAQ: MDSI), with
dispatching software for use over Internet-based wireless
networks that in effect turns a `smart phone', or data phone,
into a mobile computer terminal with an Internet portal for
receiving orders.
In other words, the software combined with the Internet and
communication products offers a more efficient system for
companies to organize their workers in the field.
Millham, whose company was involved in two previous
rounds of financing with eDispatch, calls wireless dispatching
one of the next hot applications for wireless carriers. He
explained communication between cell phone or radio takes
more time and resources than Internet dispatching so he
expects every wireless carrier within a year to offer a
dispatch product to their customers.
"Evaluation agreements are part of the normal protocol within
the telecom industry," he said. "It is a process that
progresses from a non-disclosure agreement, to an
evaluation agreement and finally, to a commercial
agreement."
If the deal indeed comes to fruition, eDispatch will be at the
center of an industry that's estimated to be worth $1 billion in
sales the next two years, according to Millham. He said
eDispatch could see $C300 million in annualized revenue
from Nextel by 2004 if `the evolving business plan is met'.
In the past two years eDispatch CEO Brian Ellis has helped
bring the company out of relative obscurity. In 1998, the firm
was called InStep Mobile Communications Inc., which
specialized in dispatch software for taxi fleets. Then the
company switched gears.
"Last October it seems like the words `wireless' and
`Internet' finally got married," said eDispatch CEO Brian
Ellis. "It's funny but if someone had invested $C25,000 last
January in eDispatch, you'd have over a $C1 million today.
That's significant for a small company playing in a global
space."
Ellis said Nextel and eDispatch have started beta testing the
dispatch service with a few of Nextel's customers.
"Telecommunications firms typically sign their agreements
after they're successful," said Ellis. "When the beta testing
is successful the service can be launched. At this point and
time (the prospect of signing a deal with Nextel) is as good
as it gets."
In addition to Nextel, Ellis said eDispatch is targeting the top
15 telecommunications companies in North America as
potential customers.
"We believe 80 per cent of all wireless Internet applications
for the next three years will be sold through these people so
it's the quickest way to enhance our revenues."
In September of 1999, eDispatch closed a deal with its first
big customer- Southern LINC, which is a subsidiary of the
Southern Company, the largest electrical utility in the US.