Bill Gibson

When the financial forecasts call for pouring rain, it's best to find yourself a big cash umbrella. That's precisely where Bill Gibson and Wireless Inc. sought shelter when the telecom market went overcast this winter. Wireless Inc. found shelter with interWAVE Communications, a publicly held company looking to get in the fixed-wireless biz — and a company that also has $100 million cash on hand.

“When you haven't turned the corner on profitability, you are taking an awfully big risk,” says Gibson, Wireless Inc.'s chairman. “There are a gazillion small companies out there. Some of them are going to fail. We're not going to be one of them.”

As founder of Digital Microwave — now DMC Stratex — and a long-time angel investor in the broadband wireless space, Gibson recognizes that newer technologies such as fixed wireless tend to bear the brunt of the economic abuse. The key to beating the cycle, Gibson believes, is to act fast. Make sure you don't alienate your customers, be completely honest with your employees, but take extreme measures and take them quickly, Gibson says.

“If you're going through a tough time, the worst thing you can do is bury your head in the sand,” Gibson says. “You have to take some extraordinary action if you want to survive. In our case that was consolidation.”

Wireless Inc. was hit hard by last fall's downturn, seeing sales fall 20% to 25% below expectations. Foregoing an IPO last summer, Gibson says they would have had to either refinance the company at much lower valuation or merge with a larger company. Gibson and the board chose consolidation and wasted no time in finding a suitable mate.

Enter interWAVE. Wireless Inc. had just the thing: a product line of point-to-point access and transport equipment running over unlicensed spectrum. InterWAVE was financially healthy and could easily absorb Wireless Inc.'s $8 million in debt, plus it has cellular customers in need of Wireless Inc.'s microwave backhaul. A match made in heaven — or at least on Wall Street — the two plan to consecrate their union by the end of May in an all-stock deal.

While Gibson insists Wireless Inc. isn't marrying only for money, the two companies will be able to leverage each other's resources. Still, $100 million in cash and receivables makes for an awfully nice honeymoon.