Carrier WiFi

Proxim on the Ropes

Shares in wireless networking firm Proxim Corp. (Nasdaq: PROX) lost half their value today after the company said it will seek bankruptcy protection this quarter if it doesn't find a buyer or get more funding.

Proxim's shares fell $0.45 (56.26%) to $0.35 in morning trading.

"The company has an immediate need for additional financing," Proxim says in the release announcing its first-quarter earnings for 2005. The firm says it is currently in discussions with "a potential third party purchaser" but there can "be no assurance that a transaction will occur."

Unstrung laid out the extent of Proxim's problems in April (see Proxim Has a Debt Dilemma ). In a nutshell, the firm needs to raise more than $100 million to be debt free, and its not clear it can do that by selling assets like its Orinoco LAN unit or the Lynx point-to-point microwave networking business.

And even if a buyout happens, it is unlikely to bring much joy to the firm's shareholders. "There can be no assurance that any consideration available to the holders of the company's... common stock... would approach the current market trading value... given, among other factors, the preferences held by senior equity and debt holders," Proxim says.

For the first quarter ended April 1, Proxim posted a net loss of $7.8 million, or $0.24 per share, on revenue of $25.4 million, compared to a loss of $17.5 million, or $0.42 per share, on revenue of $26.7 million in the same period a year ago. — Dan Jones, Site Editor, Unstrung

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