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YDI Wireless pays $3M for Ricochet

The Ricochet saga continues, with Falls Church, Va.-based YDI Wireless Inc. becoming Ricochet Networks Inc.’s fourth owner in two years.

YDI bought the company for $3 million in cash, along with 42,105 shares of YDI common stock and a $300,000 unsecured note, payable over three years.

The company plans to continue running the Ricochet-branded consumer business in the existing Denver and San Diego markets. The service, which operates in the 902-928 MHz and 2.4 GHz unlicensed frequency bands, allows users to wirelessly connect to the Internet at speeds of up to 176 kilobits per second. It is powered by pole-top radios spread across power grids within cities.

YDI will retain all current Ricochet employees, with exception of the previous chief executive officer, who has opted for a lifestyle change, which led to the sale of the company, according to David Renauld, vice president of corporate affairs at YDI.

Expanding the Denver and San Diego networks, re-activating the 17 markets where the Ricochet network was active under its first owner and marketing the service to governmental agencies all represent “exciting possibilities” for the future, Renauld said.

YDI is a supplier of wireless data equipment and designs point-to-point and point-to-multipoint wireless systems for applications including wireless Internet, video, local area networks, wide area networks, MANs and virtual private networks.

Last week, the company also closed its acquisition of Terabeam Corp., which provides broadband wireless systems using high-frequency millimeter wave and free-space optics technologies. YDI also recently acquired KarlNet Inc., which develops software for operating and managing wireless networks.

Terabeam and KarlNet will be combined with YDI while Ricochet, which differs because it functions as a service provider as well as an equipment provider, will operate more autonomously, according to Renauld.

YDI, which began trading on the Nasdaq SmallCap market just last week, was up 15 percent to trade at $5.75 per share at market close on Wednesday, following the news of the purchase that morning.

Under its original owner, Metricom Inc., the Ricochet network was active in 17 markets across the United States. Metricom targeted travelling business people and charged $80 per month for unlimited access. Those networks went defunct when Metricom declared bankruptcy with a $1 billion debt.

Aerie Networks Inc. purchased Ricochet out of bankruptcy for $8.25 million in 2002. The company recovered the Denver and San Diego networks and focused on the consumer market, charging $45 per month with $100 modems, but Aerie couldn’t keep the company alive either.

Late last year, Ricochet was purchased by Denver-based EDL Holdings Inc., a Victor Mitchell Family L.P. company. EDL originally planned to expand the existing networks, ramp up advertising and roll out new pricing plans to attract new consumer customers, but then revised its business model to sell its service to municipalities across the United States and internationally.

Other wireless-data centric service providers have fared about as well as Ricochet has in the past. Witness the fates of Monet Mobile Networks Inc., Motient Corp., Ricochet Networks Inc., XO Communications Inc., Teligent Inc., Winstar Communications, two-way paging carriers and others. A variety of reasons have been offered for such companies’ failures, including network speed, coverage, pricing, competition and lack of funding.

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