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Great-Picks.com Profile
INTERACTIVE NETWORK, INC. SYMBOL: INNN
EXCHANGE: OTC BB
RECENT: $ .87 - 1.188 USD
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Interactive Network, Inc. holds the patents that cover most of the technology that is the basis for interactive media.
What is interactive media ? By utilizing Interactive Network's technology, broadcasters, cable programmers and operators,and satellite providers can provide the end user with the ability to simultaneously watch and interact with television programs and advertisements. Applications include: Games, Advertising, On-line Gaming, responses, & E-commerce.
Interactive Network, Inc. is both an interesting and timely play on interactivity over TV and the Internet, particularly in view of its extremely low market valuation of $35 million (40 million share o/s X $.87). This was the original ?hot stock? in interactive TV several years ago when it was selling in the teens with major brokerage and industry sponsorship. INNN suffered from both poor management and the development of technology that was way ahead of its time. It filed for Chapter 11 Bankruptcy protection, despite over $100 million had been invested in the company. As a result INNN operations were dormant for 4-5 years and the interactive TV and Internet markets moved ahead developing into the most exciting industries on Wall Street.
Consequently many of today?s interactive entertainment stocks have entered this market oblivious to the INNN patents and technologies.
New management has turned INNN around and the company emerged from bankruptcy in April of this year when industry
giants Tele-Communications Inc. (now AT&T), Motorola, Sprint and GE (NBC division) all took common stock in INNN at
$5.00 per share in exchange for $39 million of secured debt. Additionally these companies infused another $12.5 million to complete the plan of reorganization. Obviously they understand the today?s worth of the Company?s patents and technologies and the future value of INNN shares. This offers present investors an exceptional opportunity with the stock trading below $5.00 per share.
Market Valuations of interactive entertainment companies have hit record highs. Wink Communications was brought public by DLJ and Alex Brown a few weeks ago in a $76 million offering now has a $1.13 billion market capitalization and generated over a 100% gain for new investors. WINK offers the same type of interactive TV features that INNN?s patents cover, but INNN technology delivers greater content capabilities and an ability to reach many more viewers for competition input.
The Company is now positioned to regain its market position by leveraging its intellectual property patents and moving ahead with existing licensing agreements. Currently INNN holds 6 patents that cover most of the technology that is the basis for interactive media. These patents represent a premier position within the industry and the Company will expand this number to nearly ten-fold over the next year. Because INNN was the first to develop the interactive technology, many of the leading entities in the market today have infringed upon INNN?s patents and will either be force to pay licensing fees or develop agreements for joint venture marketing. INNN management recently stated, "The friendly Licensing of IN's technology and patents to other companies is only one source of income. The second is the vigorous enforcement of our intellectual property. It
is my intention to retain a leading intellectual property litigation firm to represent Interactive in its licensing and patent enforcement program. We have successfully litigated infringement in the past and will continue to do so in the future. I believe that many of the companies that entered into the Internet and enhanced TV arenas while IN was preoccupied with a major litigation and fighting for survival are potential licensees of our intellectual property. The advisory board will assist management in identifying infringing companies and pursuing a licensing arrangement or litigation if necessary. We will aggressively pursue infringement of our patents in the future. It is my plan to move the Company forward through the most efficient use and marketing of its assets while continuing to develop and enhance its intellectual property". In fact an INNN licensee in England is introducing the first national interactive TV network (Two-Way TV: www.twowaytv.com). Last year Cable & Wireless (NYSE: CWZ) England?s largest Cable TV company paid $21 million for 50.1% (industry observers believe this stake is now valued at over $100 million) of Two-Way TV in order to add their "unique and innovative brand of interactive entertainment" to CWZ's digital TV and to help market Two-Way?s services to other operators. This system allows millions of viewers to play along with their favorite television shows and compete for prizes. This interactive entertainment service which can be offered by
broadcasters or network operators on a turnkey basis for digital TV platforms is being offered world-wide and plays a unique role in the digital broadcasting explosion. Two-Way's technology will be in the CWZ cable boxes and INNN's patents are the basis of Two-Way's technology. Through the generous licensing agreement with Two-Way, INNN will begin to recognize significant royalty income with the activation of Two-Way?s service. Additionally, INNN has announced its intent to negotiate a joint venture with Two-Way to begin service in the United States Market. The U.S. market is 17 times larger than England(250 million TVs vs. 14 million) and will generate substantial royalty revenue for INNN.
Given today's low market capitalization of INNN an aquisition scenario is logical. It is cheaper for a large company to acquire INNN rather than pay the royalties owed by the infringement of INNN's patents. These settlements could be staggering because it is likely many of the Internet companies, especially those involved in e-commerce are in violation of INNN patents. INNN has over 40 companies targeted for possible infringement and has set precedent several years ago in a successful litigation against NTN Communications. Inc. (AMEX: NTN) for approximately $4 million.
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