In the last 12 months there seemed to be no ceiling on the share price of Omnipoint Corp., the Bethesda wireless phone company. Onward and upward it went, from $8.62 1/2 early in 1999 to $120.62 1/2 at year's end, with most of the gain occurring after the company agreed in June to be acquired by VoiceStream Wireless Corp. of Washington state.
No Washington area firm had a bigger percentage gain in its stock price in 1999 than Omnipoint's whopping 1,195 percent jump.
But that was last year's news.
Here's this year's news: Omnipoint's stock took a 17.2 percent hit this past week, dropping to $99.93 3/4 in Wall Street's large-scale profit-taking among a wide array of technology stocks throughout much of the week.
So who's worrying?
Certainly not Douglas G. Smith, Omnipoint's 46-year-old chairman and chief executive, who saw the worth of his own 14 percent stake in the company drop from more than $900 million to $750 million in five days' time.
"If you look back in December, about the middle of the month, we were at or below this number then," Smith said Friday as he waited to board a plane in Seattle. "You have to look at it in the big picture. It shouldn't be viewed as anything other than profit-taking. People balance their portfolios every January."
Moreover, he said, in the long run, "the wireless industry is so strong we're all going to do well. I'm an optimist."
Last year, as more and more people took a liking to wireless phones, so too did investors make bigger and bigger bets on the shares of Omnipoint. It was trading at $20.81 1/4 a share last June 23, the day VoiceStream announced it was buying Omnipoint. It is a deal that is still awaiting Securities and Exchange Commission approval, but one that Smith and analysts expect will be completed in the first quarter.
Since then, the stocks of the two companies have more or less traded in tandem, mostly going up, but both dipping in the tech sell-off last week. Wall Street's love for the merged venture was enhanced even further when VoiceStream in September said it would buy Aerial Communications Inc., another wireless firm.
"The combination of the companies makes it a much more valuable company," Smith said. "I felt we were undervalued for the first six months of the year. But the market recognized the next step each time."
The three firms together had 1.7 million customers at the end of the third quarter and wireless licenses covering 220 million people in the United States.
Smith predicted that with the completion of the mergers, "we are going to have a terrific year." He said people increasingly "will access the Internet by wireless phone, more than any other way," especially to perform everyday tasks, such as checking stock quotes or airline schedules.
In addition, he said, the firm's fortunes are buoyed by its investment in the Global System for Mobile (GSM) wireless communication network, particularly its $150 million purchase late last month of Sprint PCS's GSM infrastructure in the Washington-Baltimore area.
Analysts also shrugged off the drop in Omnipoint's share price. Jeffrey Hines, an analyst with Deutsche Bank BT Alex. Brown, said, "I think it's only temporary. Wireless will replace wire as the way to communicate."