Arch Communication

Bryce Iwata

Acc 660

April 2, 2002

Arch Communications Group

Arch Communication Group Incorporated, founded in 1986, is the third largest paging company in the U.S. with nearly 3 million customers. Arch followed a strategy of low prices, standard and reliable technologies, and prompt and efficient service delivery.

There were two main industries regarding pagers: manufacturers and service providers. Arch Communication is a service provider and is only smaller than PageNet and MobileComm.

The problem for Arch Communication Group Incorporated is that the financial forecast is too optimistic despite the stock spiraling downward in value. The threat of substitute products like cellular phones, personal communication services, and mobile satellite communications threatens the financial prosperity of Arch. With the benefit of hind site, cellular phones have become very popular and it replaced the beeper completely. The number of beeper users has decreased dramatically such that only a few people use it.

One solution that Arch could do is to continue operations as is. This solution would not be my recommendation since continuing on a status quo basis will prove to be a blunder with the rise in popularity of cellular phones.

Another solution is to merge with another service provider. This way, both companies can pool their assets and attack the industry together. However, this will not solve the problem of substitute products taking the place of the beeper. Therefore, this is not my recommendation.

Another solution is to sell the company and just leave the industry. The shareholders and the employees may not like this idea since that would mean the stockholders will lose a lot of money since the stock has been declining and value and the $506,216,000 of debt that the company must pay in 1995....