Dated 6/8/99
Some good news/hype:
Dear ISN Subscribers,
While we rarely provide you with mid-week updates in order to keep your
e-mail box as uncluttered as possible, we felt it was necessary to announce
to you in a timely fashion that we are adding mPhase Technologies, Inc.
(OTC BB: XDSL), an emerging Digital Subscriber Line (DSL) equipment
company, to our “Ones to Watch in 1999” group of Internet companies. In
doing so, we ask that analysts, brokers, individual investors, and
potential strategic partners do their due diligence on mPhase as a possible
investment opportunity or acquisition target.
For those of you who are new to our “Ones to Watch in 1999” group of
Internet companies, these are companies which we predicted, initially in
December of 1998, to become leaders in their various Internet sectors in
1999. The group including CMGI, DoubleClick, E-Trade, and Starnet
Communications, just to name a few, is up well over 140% year-to-date and
has beat all other Internet watch lists in terms of stock price performance
in 1999.
We believe that mPhase Technologies, Inc. (OTC BB: XDSL) is an interesting
investment opportunity for several reasons. While the markets remain
volatile ahead of a possible increase in interest rates by the Federal
Reserve Bank, Digital Subscriber Line (DSL) companies including DSL
equipment makers and DSL high-speed Internet access service providers
continue to sustain high valuations that would imply market leadership.
As you may already know, DSL technology is currently the largest
competitive threat to Cable Modem technology in the market for high-speed
Internet access. Recent DSL market arrivals such as Covad Communications,
Northpoint, and Copper Mountain have achieved high stock prices upwards of
$70 with multi-billion dollar valuations on their first day trading and
beyond.
While mPhase Technologies has clearly not achieved the market share of
these companies, we believe that mPhase's sub-$100 million dollar
capitalization and unique position of being the sole DSL equipment company
able to provide high-speed Internet access, numerous channels of Digital
Television, and traditional voice telephone service over an existing
ordinarily telephone line through the use of the company's proprietary
Traverser system grants mPhase a comprehensive investigation by the retail
and institutional Internet investment community. mPhase is currently
involved in a private financing that will allow for company expansion and,
in a recent discussion with the company's management, we learned that the
company is interested in pursuing a Nasdaq Small Cap or Nasdaq National
Market listing once the financing has been completed and once the exchange
requirements have been met.
While many factors prompted our addition of mPhase to our “Ones to Watch in
1999” group of Internet companies, an elite group of Internet companies
which we consider to be leaders in their respective Internet sectors, none
was larger than the recent escalation of growth and expected future growth
of the DSL sector.
The outlook for DSL companies has only recently started to look bright. In
early 1998, when Internet stocks started to heat up, it was expected by
many analysts that the Cable Modem would become the dominating technology
used to enable high-speed Internet access. However, after a full year,
technology analysts are now starting to realize that DSL providers may
actually match or beat cable modem user market penetration within the
upcoming years. Phone companies are finally realizing the benefits of
using DSL to compete with cable modem ISP's and to increase their revenue
stream. In addition, the market penetration of cable modem service on a
national basis continues to remain poor due to the slow deployment of
two-way switching hardware at cable plants. Therefore, companies such as
Excite@Home (Previously “At Home”), and Time Warner's Road Runner are
starting to shift out of the investment limelight to make room for DSL
equipment makers and service providers.
Our opinion of the DSL sector was first affirmed by analyst reports issued
by BancBoston Robertson Stephens, Morgan Stanley Dean Witter, Dain
Rauscher, USB Piper Jaffray, B.T. Alex Brown, and Goldman Sachs, all of
which initiated coverage of DSL-related stocks such as Copper Mountain and
Northpoint in the last week. In addition, in an investment conference we
attended today, we were treated to a bullish statement regarding the DSL
sector by Garret Van Wagoner, President and Portfolio Manager of Van
Wagoner Funds, one of the top performing mutual fund companies
year-to-date.
If you are an institutional or retail investor, we invite you to find out
more about mPhase Technologies, Inc. and its Traverser system by visiting
the mPhase Technologies web site, mphasetech.com, the mPhase TV
Network, mphasetv.net, the company's web portal co-branded by
Infospace.com, as well as our profile of the company on our
InternetStockNews.com web site (http://www.internetstocknews.com). Media
representatives are invited to conduct company interviews by calling
1-877-MPHASETV or by e-mailing SueCifelli@mphasetech.com. In addition, on
our Internet Stock News site, you will find and be able to download a
recent research report by Kaufman Bros., L.P. in which the firm holds a
short-term and long-term buy rating of mPhase Technologies, Inc. with a $16
price target. mPhase Technologies, Inc. is traded through quotation on the
OTC Bulletin Board system under the symbol XDSL.
We hope that this briefing on mPhase Technologies, Inc. has been very
informative. Stay tuned for our weekly wrap-up and commentary about the
Internet sector on Friday.
Cheers!
-ISN |
