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Technology Stocks : WorldGate Communications, Inc. (WGAT)
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To: Champolion who wrote (67)4/17/1999 9:35:00 PM
From: Shawn Fisher   of 589
 
Champolian et al.

My 2 cents.....

The comparison between ATHM and WGAT was made a few responses ago. Here is my opinion on the differences between them:

ATHM's market started out providing "turnkey solutions" for High Speed Data Access for MSO's (multiple system operators) that either didn't have inhouse expertise or preferred to have someone else do it for them. It is a difficult proposition to do this well.

Their (ATHM's) initial target market is the 30-40% PC Households within the MSO's franchise areas. Initial goals range from 3 to 5% penetration, with that ramping up to 20% over 5 years. So doing some basic math, using a 100,000 HHP (Homes passed) system in 5 years your business model will assume that you have a PC Population of 35,000, (35% of 100K) 20% of which is 7,000 users @$35.00/month avg. = $245K/mo. Of that the MSO must share a % of the revenue with ATHM.

WGAT has a target market of the 60% of PC Deprived households assuming the same example as above you have target market of 60K x 20% = 12,000 users @$8.00/mo avg. = $96K/mo. The difference is that their is a much LOWER barrier to entry which leads me if I were an MSO to project higher penetration in the range of 30%, increasing the monthly revenue to $105,600. The other interesting thing is that initial capital costs are significantly lower than with ATHM or equal. Not to mention the ongoing support costs which are becoming an increasing sore spot for operators will be next to none.

Bottomline.....MSO's can offer a product to a large segment of their market that is untapped at this point. THe ATHM service and WGAT are significantly different. Ask anyone that has used both...and I have. Also, the infrastructure is in place and here is a simple way to optimize that investment.

Just as there is more than one player like ATHM in that space WGAT IMHO will be one of a group that offer these services / products. For my money, I am long on these guys......
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