Hybrid Networks burned by Sprint MMDS freeze

Just when broadband fixed-wireless vendor Hybrid Networks seemed to be recovering its financial bearings, it was hit hard by Sprint’s decision to freeze any future deployments of multichannel multipoint distribution service [MMDS] systems until second-generation gear is developed.

As Sprint’s largest supplier--and, conversely, with Sprint as its largest customer--Hybrid today tempered generally positive third-quarter results with concerns about future business. For the quarter, Hybrid said it met previously stated guidance with net sales that increased 78% to $9.7 million. The company also reduced its net loss to about $922,000 or 4 cents per share, from $12.9 million or 61 cents a share in the year-ago quarter.

But that good news was tempered by Sprint’s decision that “will affect Hybrid’s future revenue streams from Sprint until second-generation technology is available and new shipments to Sprint are made,” said Hybrid President and CEO Michael Greenbaum.

While developing that equipment, Hybrid will continue to provide customer service and technical support for Sprint’s 52,000 fixed-wireless customers in 14 markets, Greenbaum said.

It could be a while until technology that meets Sprint’s second-generation demands is ready, Greenbaum said. Sprint’s criteria includes technology that obviates line-of-sight issues and encourages self-installation and a retail model.

“I think, in three quarters, we can do a prototype that will show the industry that good science can be delivered on a reliable and robust and cost-effective basis, and it will probably take another quarter or two after that to work out the production requirements,” Greenbaum said.

Meanwhile, Hybrid will “place extraordinary emphasis on new product development and review some of the other areas where there will not be as great a need,” he said.

On the positive side, Greenbaum said Sprint is pretty much an isolated customer case. Because of its residential focus, Sprint “has different characteristics than the small/medium enterprise market actively pursued by other customers--WorldCom, for example.”

Residential service is a more difficult technological challenge than enterprise and will require product changes that are more revolutionary and evolutionary, Greenbaum said.