You wouldn't have guessed that the next hot trend in telecom would involve a leap from virtual reality to -- telescopes.
But investors hot on the trail of the Next Big Things in optical networking and wireless communications were barking up
tree Wednesday, pushing the stock of this binocular-and-telescope concern up 77% to close at 53.
Naysayers might note that one small lens inside a complex laser-communications system is the extent of Meade's connection to this high-speed, wireless, Internet-access plan, offered by a widely watched, yet closely held optical-networking outfit called
. An analyst says he doubts Tuesday's announcement of a contract with TeraBeam portends a change in focus at Meade, which otherwise hasn't been in the Internet infrastructure business.
But the dramatic Meade upswing is an apt illustration of the seemingly boundless investor enthusiasm for TeraBeam -- or whatever else passes as the Internet's new frontier on a given day. And it suggests that though the
has been in retreat recently, investors still can get worked up about something hot in tech -- even something as slippery as this patch of the sky called fixed wireless.
What a Week
Though founded in 1997, TeraBeam has been on the tech scene really only one week. But oh what a week. On Thursday, the company hired a marquee-name CEO in
head Dan Hesse. Hesse, who was passed over to lead
wireless unit into its pending IPO, was widely seen as a short-timer, despite the fortune in stock options that hung in the balance.
On Friday, TeraBeam was featured in a gushing endorsement from telecom's ultimate tech guru,
, in his monthly newsletter.
Finally, Wednesday brought a terse announcement that TeraBeam had set an original equipment manufacturer deal, value undisclosed, with Meade.
Analyst Brion Tanous, who follows Meade for
First Security Van Kasper
, says he has no reason to believe the company has changed its focus to leading-edge optical development from stargazing equipment.
"I do think there has been a lot of institutional selling into the retail market on this buzz, though," says Tanous, who has a strong buy on Meade and a 38 price target, which the stock smashed through Wednesday with a gain of 23 1/8 to close at 53. First Security has no banking ties to Meade.
The Last Mile
As nearly every Internet user knows, the broadband revolution is generally contained to the big pipes in the middle of the network, and trickles out at agonizingly slow speeds through the old copper wires at the user end, or last mile.
Gilder, whose mere
mentions of such Internet infrastructure makers
NorthEast Optic Network
sent the stocks flying, said that TeraBeam's wireless optics "portends the impending end of the last-mile problems."
According to Gilder and a TeraBeam patent application dated Jan. 27, TeraBeam bypasses the slower building access lines by using two-way lasers to broadcast data through the air between network hubs and satellite TV-sized dishes in office buildings. By keeping the optics and losing the fiber, TeraBeam presumably provides all the broadband capacity of fiber-optic cable directly to an office network.
"The big advantage to doing this is that it requires no digging up sidewalks and no right-of-way contracts or rooftop leasing," says TeraBeam founder and Chairman Greg Amadon. "So it's quick to deploy. We can install a system in an hour or two."
At the core of this system is a telescopic and holographic technology developed by TeraBeam and Amadon, a Stanford poli-sci grad with no formal technological training. Amadon says the holographic lens shrinks the required size of the laser telescope to 6 inches from a meter in length.
Amadon, whom Gilder calls a "serial entrepreneur," most recently held the CEO title for
, a virtual-reality-headset manufacturer, based in Seattle, which went bust in 1997.
Amadon calls the virtual-reality gig the agony in his journey to ecstasy. "It was before the Net, and the promise of virtual reality loomed large," he says.
chose it as one of the coolest companies in 1996, but poor visual quality and a $800 price tag doomed it to the fate shared by eight-track players and video phones.
Amadon says the headsets couldn't deliver on the promise of virtual reality. "It was a product that was too early and too costly," he says.
Oddly, fixed wireless, as it's called in the industry, also has been labeled a technology before its time. The quality of delivering data through the air is entirely dependent on such things as fog, rain, snow and swaying buildings. With Seattle as its test market, Gilder says some of the problems may be ironed out.
have put their best efforts behind beaming data on microwave technology, but the Street is starting to have its doubts about how soon they will deliver on their broadband promises. Gilder says TeraBeam's optical delivery trumps the microwavers.
More and More
With 140 employees and one customer, TeraBeam has plans to roll out more service this summer. The company has no immediate plans to file for an IPO, but it has received a $27 million investment from an undisclosed telecom-equipment manufacturer. Message-board posters speculate the mystery investor is
. Amadon wouldn't confirm anything.
"There are a lot of rumors flying around," says Amadon. "And I'm very optimistic we will be announcing something with a major telecom manufacturer. But we're not in the position to talk about it now."
TeraBeam's three-year stealth development gives it a head start on the technology and on setting supply agreements with key vendors, Amadon says. "As a consequence, we don't think there will be anyone with a competitive service product for at least two years," he says.