Not OT Spyglass riding high on new deals
By Jim Davis
Staff Writer, CNET News.com
March 2, 2000, 5:45 p.m. PT
Spyglass, a developer of Internet browsers and other technology, saw its stock soar 22 percent
today after announcing that its software has been licensed by Sony.
Today's spike comes amid a stunning stock price rise for a company that, for most of its existence, has been
trying to establish a spot as one of the top names in Internet software. It was one of the browser companies
to emerge with technology originated at the University of Illinois in the '90s. The other was Netscape.
George Chandler, research analyst with Frost Securities, said the stock's surge is due in part to Spyglass'
recent strong earnings report. Revenues from software royalties showed a strong
upturn.
"Since there are much higher margins to the software side, the company was
seen as less of a service 'body shop,' so people started comparing them more
directly to their peers such as Liberate, OpenTV and Phone.com," Chandler said.
Spyglass stock has gained more than 110 percent this week alone, and has
nearly doubled since Feb. 22 when the stock closed at slightly less than $40 per
share.
Sony licensed Spyglass' Web browser and email software and will pay for
consulting services from the Spyglass Professional Services group to help
incorporate the software into Sony's cable set-top. Spyglass said today's
agreement is in addition to a licensing deal signed last year for digital television
products being developed by Sony, including set-top boxes.
In September, Sony announced a $1 billion deal to supply Cablevision around 3
million advanced set-top boxes starting in 2000. These set-tops will be able to
connect to the Internet and let consumers shop online and communicate via email
services. Spyglass will be targeting its development work on these devices, according to industry sources.
With Spyglass set to receive more royalties from products shipping this year and the additional revenue from
engineering services afforded by the new agreement, investors bid up the company's stock by as much as
$20.38 today, or about 30 percent, to a new 52-week high of $87.38. The stock has since fallen back slightly
to $ 82.25 in closing trading.
The extension of the company's deal with Sony serves to validate Spyglass' business, and subsequently
investors are starting to place bets on this company being able to show strong earnings reports starting in
2001 because of it, according to Chandler.
Spyglass, which developed Mosaic, was one of the first companies to market Web browsers. The company,
however, was overshadowed by Netscape's rapid rise. After middling success in establishing its own brand
name, Spyglass struck a deal with Microsoft, and Spyglass technology became the basis for Microsoft's
Internet Explorer Web browser.
Spyglass ultimately shifted its focus to making customized browsers for the device market in the last few
years. Spyglass' embedded browsers and server software allow users to access Internet and graphics
content on single-purpose Internet appliances.
The notion of interactive television programming has been touted for years, but the boost in Spyglass' stock
price can be taken as an indication of growing confidence that companies really are finally on the cusp of
offering Net content, commerce and services and television programming via TVs.
"This is the year where Spyglass is starting to see products move from the development lab into consumers'
hands," said Anup Murarka, vice president of interactive television at Spyglass.
"Certainly, we are not going to get the bulk of the deployments this year, but the industry as a whole is finally
starting to see (interactive TV) move out of the labs," with 2000 being the start of that process, Murarka said.
Liberate Technologies, another provider of software for interactive TVs and information appliances, is
another example of this investor optimism. Liberate has seen its share price rise over 1400 percent since
last year's initial public offering on optimism that cable companies that have signed deals with the company
are getting ready to deploy the technology starting in 2000.
Still, these are emerging markets and it remains to be seen what sort of profits and revenues these software
companies will eventually generate. It also remains unclear which of the software companies will emerge on
top. As with browsers, much of the technology that goes inside set-top boxes and Internet devices can be
fairly basic and interchangeable.
Frost's Chandler said that Spyglass' offerings for wireless devices such as cell phones and handhelds will be
a bigger factor in the near term for the investor enthusiasm because there is less risk in assessing the
potential of the market.
"When are people going to accept and actively use and engage the TV?" he asked. Investors are certain it
will be a huge market, but the question nobody is sure of yet is when, he noted.
Related news stories
? Motorola, iMagicTV help forge the way for interactive TV February 15, 2000
? Sony in $1 billion deal for TV set-top boxes September 16, 1999
? Spyglass, Sony in set-top deal April 20, 1999 |
