The third quarter was a "liftoff" quarter in which we clearly established
WebLink Wireless as an important player in the anticipated huge market for
wireless data services. I think the quarter also confirmed that your Company
made a good bet five years ago by investing in the development and deployment
of a nationwide wireless data network. To date, we have over $600 million
invested in capital expenditures and start-up losses to have an impressive
network covering approximately 240 million people in the United States.
The Wireless Data Division is where almost all of our value is, and
appropriately so, since it is where most of our capital is employed and where
all of our future growth resides. Although the Traditional Paging Division is a
good source of cash, it is in a seriously declining market and will be less of
a provider of cash each quarter. We expect the Wireless Data Division to reach
positive cash flow relatively quickly (as early as the second half of next
year) and become the primary producer of cash in 2002 and thereafter.
In the quarter we added 81,055 wireless data subscribers, a 221% annualized
growth rate! In the prior two quarters we added 32,722 and 52,512 subscribers,
respectively, annualized growth rates also in excess of 200%. In the fourth
quarter we expect to report another record growth quarter with over 110,000 net
subscriber additions. We are on the verge of top line growth in Wireless Data
that exceeds the best of times ever experienced in the heyday of Traditional
Paging.
The Motorola Talkabout T900 I-Messaging device is an amazing subscriber device.
We received the first shipment in late June and we stocked many of our national
retail relationships in the third quarter. Motorola T900's powered by WebLink
Wireless are available today in Radio Shack, Best Buy, good guys!, Office Max,
The Wiz and Fry's Electronics. In the fourth quarter we will ship to Target and
Eckerd's, with the goal of being well stocked in all our relationships for the
holiday buying season.
The increased losses in the Wireless Data Division in the quarter were largely
due to the large shipments of the T900 to our retailers to fill their
distribution centers and stores. At the time we ship units we recognize any
buydown we provide and the future sales commission we will pay the retailer. As
a result, the third quarter had an uncharacteristically large increase in cost
of goods sold relative to equipment revenues. Future quarters are expected to
be moderate compared to the third quarter in this regard.
We recently announced a strategic relationship with Yahoo! to work together to
integrate and market our services. There is a rich market opportunity here for
both companies and we expect to announce availability of the first service in
the first quarter of next year.
Bell Mobility, a wholly-owned division of Bell Canada, and our network partner
in Canada, announced commercial build out of their wireless data network in
Ontario and Quebec with the expectation that the balance of the country will be
available by the end of this year. As a result, we will soon be offering
Canadian coverage for our U.S. customers and, due to our 10-year exclusive
roaming agreement with Bell Mobility, we will start to enjoy roaming revenues
from Bell Mobility customers who roam to the United States.
In the third quarter, we added our first two hundred telemetry units, ushering
in an age when our customers are not just humans but also machines. In the
fourth quarter we expect to add a couple thousand telemetry units and much
greater amounts next year.
These are exciting times for your Company and I encourage you to go to
www.weblinkwireless.com and purchase a T900. I want our stockholders to
experience the service we provide our customers and the impact two-way
messaging has on making people's lives more informative, fun or productive.
Thanks for being part of it all.
