TREVOSE, Pa.--(BUSINESS WIRE)--May 4, 2000--WorldGate
Communications, Inc. (Nasdaq:WGAT.O) the leading provider of high
performance Internet access through the TV using standard cable
set-top converters and cable infrastructure, today announced financial
results for the first quarter ended March 31, 2000.
The announcement highlights the Company's strong momentum marked
by a list of accomplishments in technology advances, intellectual
property protection, and increased consumer acceptance and commercial
deployment of its interactive service worldwide.
Hal Krisbergh, chairman and CEO of WorldGate commented, "This has
been a very exciting quarter for WorldGate. We are seeing a major
shift in the focus of the industry to the thin-client network
architecture that we have long championed. We believe the rivalry
between thin-client network architecture and fat-client is being
settled in our favor as the industry sees the advantages of our
thin-client approach -- centralized control, cost effectiveness,
flexibility to upgrade technology, and reduced in home obsolescence.
The major cable operators are accelerating deployment of digital boxes
which are only capable of utilizing thin-client architecture.
Furthermore, approximately $1 billion has been spent for recent
acquisitions by players in this space for companies to develop
thin-client capabilities similar to WorldGate's leading technology,
further validating our first mover advantage. Our success in Channel
HyperLinking technology and infrastructure, broad intellectual
property coverage, increased commercial deployments, and success in
working across the full spectrum of advanced analog, digital, and
advanced digital boxes has put even more distance between WorldGate
and its competition."
Since the beginning of the year WorldGate(SM) has made significant
accomplishments in a number of critical areas, including (1)
additional deployment commitments for the WorldGate(SM) Service in
LaGrange, Georgia and Mexico City, Mexico, both on the digital
platform; (2) issuance of an additional patent from the U.S. Patent
and Trademark Office, covering elements of the Ultra-Thin Client(SM)
and Channel HyperLinking(SM) technologies; (3) agreement with most
major video-on-demand (VOD) vendors to develop integrated and
compatible WorldGate(SM) Service and VOD solutions for the cable
operator on the Motorola DCT series of digital set-top converters; (4)
release of favorable findings from one of the first major interactive
television studies conducted in the U.S.; and (5) the acquisition of
Digital Video Art, Inc., which gives WorldGate an important presence
in Silicon Valley and critical engineering expertise on the advanced
digital set-top box. WorldGate believes that these strategic and
deployment advances put us well ahead of our competition on
development and implementation on all currently available and planned
set-top platforms.
WorldGate also announced the appointment of James Agnello as vice
president and chief financial officer. Agnello joins WorldGate(SM)
from SmithKline Beecham, where he was most recently vice president and
controller of its clinical laboratory division.
Overall, the Company now serves approximately 19,000 subscribers,
an increase of 27% from the 15,000 subscribers reported at December
31, 1999. The deployment with Cablevision, S.A. de C.V. on Motorola's
DCT 2000 will make the WorldGate Service available to 400,000 cable
subscribers with 1.2 million homes passed. This is an ideal solution
for Mexico, where demand for internet access is high and PC ownership
is low. This commitment brings total homes passed for systems
deployed, committed to deploy, or in trials to approximately 3.5
million and we remain the only commercially deployed full service
Internet through cable television provider.
Earnings
For the first quarter of 2000, revenues were $1.6 million, a 187%
increase from the $.5 million reported for the first quarter of 1999.
This is compared to $2.7 million reported in the fourth quarter of
1999. The net loss for the first quarter 2000 was $10.8 million or
$0.50 per share, compared to a net loss of $8.3 million or $0.91 per
share in the first quarter of 1999. Excluding a non-cash charge for
the accretion on the preferred stock, the net loss for the first
quarter 1999 was $6.2 million or $0.68 per share. The net loss in the
fourth quarter of 1999 was the same as the first quarter 2000, $10.8
million or $.50 per share. Cash, cash equivalents, and short-term
investments amounted to $65.1 million as of the end of the first
quarter 2000, as compared to $75.7 million at year-end.
Sales in the first quarter were lower than the fourth quarter
because, as expected, analog box deployments have been delayed as
cable operators await the availability of the new, lower cost, higher
performance SURFview boxes. Also, the Comcast digital deployment in
suburban Philadelphia is on schedule for second quarter deployment.
WorldGate expects that its agreement to integrate with the major
VOD vendors on the digital platform will further solidify its position
on this platform. The development of a software interface to permit a
smooth integration of the VOD and WorldGate applications on Motorola's
DCT series of digital set-top boxes makes it possible for cable
operators to easily offer a broad range of services to their
subscribers.
WorldGate launched several unique initiatives aimed at furthering
the goal of providing universal access to the Internet. WorldGate
believes the introduction of SURFview, a full-featured, sub-$100
advanced analog box with the WorldGate Service as a native
application, makes it financially feasible for cable operators to
offer Internet access to their subscribers for under $10 per month.
WorldGate's WISH TV(SM) program, aimed at equipping students with the
requisite Internet skills, provides a realizable opportunity to
broaden Internet access and eliminate the digital divide.
In addition, WorldGate is working with Charter Communications,
Inc. and the City of LaGrange, Georgia to provide all of the city's
cable TV households with Internet access utilizing the WorldGate
Service on digital set-top boxes. The LaGrange initiative is the first
program of its kind in the country and is a major step in supporting
the important objective to make affordable Internet access available
to all Americans, thereby closing the digital divide.
WorldGate and Nielsen Media Research announced additional findings
from their study conducted with Massillon Cable, further confirming
that consumers view Channel HyperLinking, the patented WorldGate
technology that marries TV and the Internet, as a valuable addition to
the television experience. Forty percent of the subscribers in the
study used Channel HyperLinking at least once a week, with consumers
spending over one minute on average with TV advertising linked to the
Internet and over two and a half minutes with interactive TV
programming content.
The WorldGate Service is the only Internet/interactive television
service commercially deploying on both digital and advanced analog
set-top boxes, using the thin-client network architecture that
WorldGate pioneered and that the industry has now embraced. In
addition to its first mover advantage, patents on its Channel
HyperLinking and Ultra-Thin Client technologies give the business a
strong intellectual property underpinning and its Channel HyperLinking
infrastructure makes it the industry's only turnkey service. Because
of these advantages and demonstrated consumer acceptance of its
product, WorldGate is well-positioned to take extend its leadership
position in this exciting space.
About WorldGate Communications, Inc.
Headquartered near Philadelphia, WorldGate, a leader in the
development of interactive television, was the first commercially
deployed service that enabled cable subscribers to access a full array
of high-performance, low-cost Internet services and e-mail on their
cable television sets and the cable television infrastructure rather
than a personal computer and telephone line. WorldGate is currently
deploying domestically in communities owned by cable operators Buckeye
CableSystem, Charter Communications, Click!Network, Comcast Cable
Communications, Massillon Cable, and Prestige Cable. WorldGate and
Charter Communications, in partnership with the city of LaGrange,
Georgia, are participating in a one year program that provides free
WorldGate Internet access to all cable subscribers in an effort aimed
at closing the "digital divide." WorldGate has international
deployment and trial agreements with 21 multiple system operators in
13 countries worldwide. The WorldGate Service marries WorldGate's
proprietary technology with the television set platform to use either
the existing advanced analog or digital cable converter along with a
remote control or wireless keyboard to bring the Internet to cable
subscribers. Using advanced analog converters, the Service operates at
more than two times the speed of a standard 56 Kbps telephone modem.
With digital converters, the Service can operate at 38 Mbps, over
three times faster than a typical cable modem. In addition, the
Company's Channel HyperLinking technology allows viewers instant
access from the program they are watching to a related Web site or
locally available information sources. For more information,
interested parties may go to www.wgate.com. WorldGate's stock is
traded on the Nasdaq under the symbol WGAT.
WorldGate, Ultra-Thin Client, Channel HyperLinking, WISH TV and
Internet on EVERY TV are service marks of WorldGate Service, Inc.
This press release may contain forward-looking statements that are
made pursuant to the safe-harbor provisions of the Private Securities
Litigation Reform Act of 1995. Expressions of future goals and similar
expressions including, without limitation, expressions using the
terminology "may," "will," "believes," "plans," "expects,"
"anticipates," "predicts," "forecasts," and expressions which
otherwise reflect something other than historical fact are intended to
identify forward-looking statements. These forward-looking statements
involve a number of risks and uncertainties, including the timely
development and market acceptance of products and technologies and
other factors described in the Company's filings with the Securities
and Exchange Commission. The actual results may differ materially from
any forward-looking statements due to such risks and uncertainties.
The Company undertakes no obligation to revise or update any
forward-looking statements in order to reflect events or circumstances
that may arise after the date of this release.
*T
WORLDGATE COMMUNICATIONS, INC.
SUMMARY FINANCIAL DATA
(Dollars in Thousands, Except Per Share Amounts)
Three Months Ended
March 31, March 31, Dec 31,
2000 1999 1999
---------------------------------
Statement of Operations Data:
Total revenues $1,573 $549 $2,678
Total costs and expenses 13,567 6,691 14,494
Loss from operations (11,994) (6,142) (11,816)
Other income (expense) - net 1,161 (55) 1,047
Ne (10,833) (6,197) (10,769)
Accretion on preferred stock 0 (2,111) 0
Net loss available to common
stockholders $(10,833) $(8,308) $(10,769)
Net loss per common share -
basic and diluted $ (0.50) $ (0.91) $ (0.50)
Weighted average common
shares outstanding - basic
and diluted 21,527,000 9,100,801 21,450,000
March 31, March 31, Dec 31,
2000 1999 1999
---------------------------------
Balance Sheet Data:
Cash, cash equivalents, and
investments $65,111 $4,784 $75,670
Working capital (deficit) 69,518 (773) 80,381
Total assets 79,428 10,292 89,170
Long - term obligations 493 470 638
Total stockholders' equity
(deficit) 72,034 (59,419) 82,657
*T
--30--APS/se*
CONTACT: Worldgate Communications, Inc.
James V. Agnello, 215/354-5107
or
Randall J. Gort, 215/354-5105
KEYWORD: PENNSYLVANIA
INDUSTRY KEYWORD: TELEVISION/RADIO EARNINGS MANAGEMENT CHANGES
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