The Once-Flying Paging Business Comes Back to Earth --- SkyTel's Recent Travails Spotlight the Industry's Need to Reinvent Itself
SkyTel Communications Inc.'s announcement this week that it had hired an investment banker underscores the troubles now gripping the once highflying world of paging.</br></br>Although John Stupka, SkyTel's chief executive, declined to confirm that the company is for sale, some Wall Street analysts believe that the paging firm will be sold within 90 days. Potential buyers, say observers, include MCI WorldCom Inc., one of the country's largest telecommunications companies, which presumably would be interested in SkyTel's nationwide two-way messaging network.</br></br>A spokesman for MCI WorldCom, based in Jackson, Miss., declined to comment. Wall Street believes SkyTel will fetch as much as $1.5 billion, or about a 50% premium over the stock's current price. SkyTel closed up 50 cents at $15.6875 in Nasdaq Stock Market trading yesterday.</br></br>Although SkyTel was the nation's first paging company to earn a quarterly profit, during its 10 years in business it has wracked up huge losses -- as have most paging companies. SkyTel has had to invest heavily in building its nationwide wireless messaging networks and on consumer marketing.</br></br>But with more people buying cell phones and organizers such as Palm Pilots, the alert system associated with pagers seems increasingly simplistic. This has forced the beleaguered paging industry to reinvent itself. "They need to find a match between their services and the new demands of consumers," says Steven Yanis, a wireless analyst with Nationsbanc Montgomery Securities.