Exhibit 99.1
Investor Contact:
Cindy Wyrick
SoftNet Systems, Inc.
415-343-2325
[email protected]
Media Contacts:
Gloria Parrish
SoftNet Systems, Inc. and Aerzone
Cellular: 415-846-9923
Office: 415-365-2514
[email protected]
Diane Olberg
SoftNet Systems, Inc.
Cellular: 415-601-9337
Office: 415-365-2510
[email protected]
SoftNet Demonstrates Aerzone's Broadband Wireless Technology;
Outlines Corporate Strategy and Financials
Aerzone's wireless broadband 802.11-based service will turn airports into
productive online environments; SoftNet to focus on Aerzone, ISP Channel unit
will be restructured
New York, New York, October 3, 2000 - SoftNet Systems, Inc. (Nasdaq: SOFN) is
demonstrating its new broadband wireless technology to financial analysts here
today and is presenting a vision for its Aerzone subsidiary, which has recently
formed partnerships with Delta Air Lines (NYSE: DAL) and United Airlines (NYSE:
UAL) to provide wireless broadband services in their gate areas and club rooms.
SoftNet is also outlining its overall strategic and financial plans for 2001 and
beyond.
As the backdrop for SoftNet's and Aerzone's new market strategy,
SoftNet's chairman and CEO Dr. Lawrence B. Brilliant described a typical
targeted customer for Aerzone. "Think of the millions of mobile professionals
who spend hour after hour at airports, hotels, conferences and throughout the
travel ribbon, unable to use that time productively," says Brilliant. "Their
time is valuable, and through Aerzone's service, the down time at airports can
now be productive time - for logging on to your company network, downloading
files, trading stocks, watching the news, accessing the Web or whatever you need
to do. With Aerzone and our partners, you can accomplish all these tasks working
at incredibly fast online speeds on your own laptop or hand-held device,
wirelessly connected, in the comfort of a airline club room or coffee shop or at
a gate," says Brilliant.
Many private and semi-public wireless local area networks (LANs) are
being built in corporate campuses, universities, homes, sports stadiums and
other locations based on the same kind of 802.11 wireless broadband technology
that Aerzone uses.
"Focusing on our relationships with United Airlines and Delta Air
Lines, which operate in nearly every major airport, Aerzone brings a compelling
national footprint of wireless access points to the corporate and individual
user," says Brilliant.
To take advantage of Aerzone's wireless connectivity, customers need
only a computing device and a plug-in or built-in wireless LAN card, which they
can purchase from Aerzone or from most computer retail outlets. Through laptops
or hand-held computing devices, the LAN card or installed 802.11 capability
gives users access to Aerzone service in a growing number of airport locations.
Dial-up lines are not required.
Airport Travelers Want Wireless Access
"There are more than 50 million `frequent flyers' in the U.S. market
today and nearly 8 million `constant flyers' - people who take one or more trips
every month," says Brilliant. "It's a huge market, and most of these people view
time at the airport as wasted time. We really want to change that so that
airports can become productive places for people to work."
Roughly 70% of business travelers carry laptop computers and about 80%
carry cell phones. About 75% of frequent business travelers surveyed are
interested in having fast and easy access to the Internet in airports. "These
are travelers with high demand for bandwidth and for instant, dependable access
to the online world," says Brilliant.
This is the market that Aerzone also plans to serve through its retail
locations, now named Aerzone Business Centers, formerly branded Laptop Lane,
currently located in 13 U.S. airports and expanding to 25 airports by the end of
this year. Aerzone broadband wireless service is available today in two Canadian
airports, in Vancouver and Ottawa. Aerzone plans to roll out this service in a
number of U.S. airports soon, beginning with Atlanta, Chicago, Los Angeles,
Dallas and other locations, in conjunction with its partnership with Delta Air
Lines, which was announced in April 2000, and with United Airlines, just
announced. Aerzone's Technology
Aerzone's wireless broadband service is based on what is known as IEEE
802.11 technology. "Of all the wireless LAN technologies, 802.11 has the most
industry support and the most manufacturer momentum," says Brilliant. "It's
simple to use and will soon be installed in many new laptops and hand-held
devices."
In a current laptop, a LAN networking card can be installed that
"talks" to Aerzone's access points, small devices installed in ceilings or on
walls of an airport, for example. Through these access points, the network
carries fast, two-way communication at speeds up to 11 megabits per second
(Mbps) for each and every user. This speed is about 7 times the speed of a T1
line, the most common office connection. Within 2 years, 802.11 technology is
expected to support connectivity at speeds up to 54 Mbps.
"This technology is very efficient and will easily allow for upgrades
- for faster speeds and richer content," says Brilliant. "Just as important, our
approach is technology-agnostic and does not rely on any specific frequency,
vendor equipment or commitments to either licensed or unlicensed parts of the
spectrum."
In addition to direct benefits for business travelers, Aerzone's
technology may also allow airports and airlines to streamline ground operations
- from maintenance to baggage handling - as well as support tenant growth and
provide more real-time information for travelers.
Aerzone and SoftNet's Path to Profitability
Brilliant said that Aerzone will be the engine behind SoftNet's
financial growth and path to profitability. "We plan to establish Aerzone as the
chosen partner of the leading airlines and airports seeking to `monetize' their
customer and brand franchises in the wireless Internet space," says Brilliant.
Aerzone's sources of revenue long term will be from the service
business, as a wireless Internet service provider (ISP), especially through
corporate accounts, and through access agreements with airlines, airports and
other facilities. Aerzone Business Centers will complement the wireless service
offering, providing sales support, customer service and other opportunities for
revenue growth.
SoftNet has invested $40 million in the venture and plans to invest up
to an additional $40 million. Prior to July 1, 2001, SoftNet plans for an
additional $50 million to be raised for Aerzone from new, strategic equity
partners. SoftNet anticipates maintaining an equity position of approximately
between 45 and 55% in Aerzone.
Addressing SoftNet's expected financial results for FY2000, ending
Sept. 30, 2000, SoftNet's chief financial officer Markus Rohrbasser says current
year results will be affected by initial start-up costs for Aerzone, as well as
"heavy losses from ISP Channel." (Editor's Note: For more specific financial
information, see attached financial tables and slides from the event
presentation, also available on SoftNet's web site, www.softnet.com.)
Rohrbasser says SoftNet's Intellicom unit is expected to generate sales
of $38 million in FY2001 and is expected to have positive earnings before
interest, taxation, depreciation and amortization (EBITDA) by July 2001. ISP
Channel will be "cash neutral" by the second quarter of FY2001 (January-March
2001). "We anticipate a maximum cash depletion of $30 million from ISP Channel,"
says Rohrbasser.
Rohrbasser says SoftNet's cash reserves are currently $165 million. In
FY2001, the expected uses of that cash will be: a $20 million strategic
investment in Intellicom; $30 million for ISP Channel's restructuring and
operating expenses; and a total of $80 million investment in Aerzone. This will
leave SoftNet with $35 million for corporate expenses and cash reserves.
"SoftNet is absolutely committed to building a strong, profitable
company in the new wireless broadband marketplace," says Brilliant. "We believe
our timing in this marketplace is right on target, and we are positioning
ourselves to serve the most valuable customers - the business traveler, in busy
airports. This is a business anchored with established companies, with whom
SoftNet has strong partnerships. There's no doubt that this will be the next
generation of breakthrough technology for the mobile Internet user." About
SoftNet Systems, Inc.
SoftNet is a leading global broadband Internet services company with
three operating subsidiaries.
Aerzone, majority-owned by SoftNet Systems, Inc., operates wireless
broadband local area networks and business centers in locations frequented by
business professionals, such as major airports, convention centers and hotels.
Aerzone has received approximately $60 million in initial funding from its
equity partners, including SoftNet Systems, Inc. United Airlines and Delta Air
Lines are Aerzone's lead partners in the travel industry and are also equity
partners in Aerzone. Cisco and Nokia are Aerzone's preferred wireless technology
vendors providing expertise and wireless technology to the venture.
Intellicom combines Internet services with sophisticated two-way
satellite technology to deliver a turnkey solution for ISPs, schools,
corporations and businesses. Intellicom provides two-way satellite Internet
access using a proprietary network optimizing technology. The company utilizes
state-of-the-art wireless technologies, broadband delivery, data-push and
satellite-based Internet access caching products to provide its customers with
fast access to information and efficient utilization of existing network
capacity. Intellicom operates more than 400 earth stations in the United States,
Latin America and the Caribbean as well as a 24x7 Network Operations Center,
Internet Data Center and Customer Support Center.
SoftNet is also known for its ISP Channel subsidiary. ISP Channel
currently services thousands of cable customers nationwide with two-way
broadband data services.
For further information on SoftNet Systems, Inc. and its subsidiaries,
visit www.softnet.com. or call 415-365-2500.
AERZONE FINANCIAL OVERVIEW
($ in millions, estimated, except monthly fee rates and subscriber estimates)
For Year Ending September 30
2001(Est.) 2000(Projected) 2003P 2004P
REVENUES $19 $145 $255 $360
% Growth 470% 649% 76% 41%
GROSS PROFIT/(LOSS) $(16) $55 $147 $215
% Margin NA 38% 58% 60%
EBITDA $(52) $(14) $70 $116
% Margin NA NA 27% 32%
Operating & Investing Cash
Flow (Pre-Financing) $(80) $(57) $53 $101
Average Monthly User Fee
(Run Rate) $41.79 $39.07 $34.00 $32.05
Subscribers (Average) 17,000 248,000 529,000 824,000
--------------------------------------------------------------------------------
SOFTNET FINANCIAL SNAPSHOT - Subject to Accounting treatment of restructuring
costs
($ in millions)
FY2000 Aerzone Intellicom ISP Channel SOFN Corporate Consolidated
Revenue $2.2 $10.9 $6.0 $(0.6)* $18.5
Gross Profit $1.4 $0.5 $0.8 ---- $2.7
EBITDA $(8.7) $(7.9) $(39.3) $(13.8) $(69.7)
FY2001 Aerzone Intellicom ISP Channel SOFN Corporate Consolidated
Revenue $19.4 $38.5 ---- ----- $57.9
Gross Profit $(16.4) $11.8 ---- ----- $(4.6)
EBITDA $(51.6) $0.5 $(30.0) $(12.5) $(93.6)
*Elimination
This press release contains forward-looking statements
concerning SoftNet Systems' anticipated future operating results, future
revenues and earnings or adequacy of future cash flow. (These forward-looking
statements include, but are not limited to, statements containing the words
"expect," "believe," "will," "may," "should," "project," "estimate," and like
expressions, and the negative thereof.) These statements are subject to risks
and uncertainties that could cause actual results to differ materially from the
statements, including the risks attendant to a growing business in a new
industry as well as those risks described in SoftNet Systems' Quarterly or
Annual Report.
