And another from the “What have they been thinking?” folder

On April 9, 2007, Nextwave announced that it would purchase IP Wireless for up to $235 million – the stress is on “up to” not on “$235 million.” If you look under the hood of the deal, IP Wireless investors who put in $200 in cash are getting back $25 million in cash, $75 million in Nextwave stock – which may go up or down – and the hope to get another $135 million if certain revenue milestones are being met. Well, well, well…

Lets look at this from the perspective of the investors in IP Wireless: So the investors basically sold the company for half of what they put in. You usually don’t do that because you are a firm believer in the prospects of the company. It also means that the chances of hitting the $135 million revenue accelerator are rather slim. This is a cut and run move in my opinion.
From Nextwave’s perspective this makes very little sense whatsoever. Nextwave has turned into a WiMax shop with a trunk full of dubious superfluous technologies. Nextwave needs a technology with economies of scale or at least the potential of economies of scale to reduce the cost of the RAN and CPE equipment. The quote from Roy Berger, EVP of Marketing and Communications in FierceWireless is a gem: “The mission at Nextwave is to develop technology and products that meet the needs of our customers: We’re customer driven. Different customers have different needs, and while we are totally committed to WiMAX technology, we went out and acquired GoNetworks for its mobile WIFi product and now we’ve acquired IPWireless with its TD-CDMA. From our perspective, this acquisition allows us to be even more customer-driven, by fulfilling every potential customer need.” This sounds all and good, but lets face it, IP Wireless did not sell because it had many customers, it has extremely few and lost in every major beauty contest. The customers have driven away from the technology – well, a completely new way of thinking of being customer driven and hence that “potential” is rather small. (I am sure if someone from Nextwave reads this they will contact me and protest that its all different.) On one hand they are completely committed to WiMax but then they buy a technology very few people seem to want for a bargain price that replicates what they are completely committed to. That’s like a husband who proclaims that he is completely committed to his wife after he told his friends that he just got a new girlfriend on the side… On the bright side, Nextwave still sits on a boat load of money and they can afford to spend it on little hobbies like that. It just doesn’t help the investors who own the stock.