ARTICLE # 2 06/09/98 Dow Jones News Service
(Copyright (c) 1998, Dow Jones & Company, Inc.)
Digitcom 's e-mail newsletter was an offshoot of the chat session, created as another way
to communicate with on-line investors. Templeton, vice president of communications, says
employees of Digitcom don't participant directly in on-line message boards, but he says he
and Chief Executive Chin monitor the chatter to keep tabs on investors' concerns.
Chin acknowledges the impact that on-line chatter has had on Digitcom 's stock in a
message sent out in the first installment of the company's newsletter. "I know that
Digitcom 's involved stockholders have helped insulate us from some of the ups and
downs that many bulletin board companies endure," he wrote.
But despite the loyalty of on-line investors, analysts remain cautious about Digitcom 's
prospects. For all of its efforts to communicate with the Internet crowd, the company has
released little financial information. Digitcom has posted only a handful of financial data
for 1997, and it hasn't released any earnings numbers since then. A spokesman says
updated information will be released within the next several days.
Because its stock trades only in the over-the-counter market, the company doesn't have to
meet the rigorous requirements to report financial information that it would face if its stock
traded on one of the major exchanges or the Nasdaq Stock Market. No analysts on Wall
Street formally cover the company. Digitcom says it is preparing an application to list its
stock on Nasdaq's SmallCap market.
"It's highly speculative," says Steve Harmon, an analyst at Internet Stock Report, an
on-line publication of Mecklermedia. "[On-line investors] get behind something. They talk
it up. They are willing to believe in it. I'm not a believer. I haven't seen enough to make a
decision."
The company says it posted a profit of $292,585, or 2 cents a share, on revenue of
$777,195 in 1997. It attributed its profit to sales of voice mail products, a business it has
run since the company was formed in 1986. It hasn't begun any commercial operations in
the Internet telephony arena.
Digitcom plans to break into the Internet telephony market through partnerships with
telephone companies in emerging markets in Southeast Asia, the Middle East and Russia,
for instance. Emerging markets like these are particularly anxious to get technical help as
they open up their markets for the first time, says Templeton.
The company also plans to acquire several small long-distance carriers in the U.S. into
which the overseas operations will connect. "We're engaged in several serious
negotiations," says Chin. Once the foreign and U.S. units are established, they will market
to consumers in their respective countries, and Digitcom will act as a holding company.
Templeton says Digitcom plans to use a stock offering or debt issue to finance the U.S.
carrier purchase. "[We're] looking for targets that don't require a great deal of cash up
front ... and are doing in the neighborhood of $15 million to $30 million in revenues per
year," says Templeton. He didn't identify any targets.
Last fall, the company raised $880,000 in a private sale of stock. Digitcom has a total of
18 million shares outstanding, and 6 million of those shares are in the hands of the public.
Chin controls about 10.5 million restricted shares, and an additional 1.5 million are held by
other insiders.
(END) DOW JONES NEWS 06-09-98
12:02 PM
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