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Technology Stocks : IATV-ACTV Digital Convergence Software-HyperTV

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To: Mkilloran who wrote (12735)	6/15/2001 12:10:29 PM
From: richard badauskas	of 13157

ABN AMBRO has recent research on ACTV dated 14th May projecting the current June quarter total burn to drop to 16 cents per share or $8.4M. So the burn rate is expected to come down by about $2M for the quarter (March quarter was $10.5M). ABN AMBRO has also completed a "Return On Bandwidth" study where they identify Interactive Advertising as providing cable operators a very healthy return on equity. As opposed to VOD where costs will be very high. ACTV SpotOn can also be installed on any "low tech" cable box so it represents high return for little expense (EBITA margin over 60%). SpotOn can also be established with most cable operators through the HITS facility in Colorado jointly owned by Liberty and AT&T. AMBRO does not identify all of the revenue streams that can flow to ACTV through SpotOn and ancillary support services but the report does talk about a $3 per subscriber, annualized license with 10% annual adjustments payable to ACTV from the cable companies. If we "guesstimate" (my rough stab in the dark) and assume that ACTV gross is about $4-5 per subscriber and we have 80% penetration into 40 million digital subscribers (in several years time) we get a gross of $128-160M per annum in a very fast growing market (just in the U.S.) Considering the fact that the long delayed AT&T trials are finally going to get underway and that the press is talking about other MSO's running trials early next we are very close to real revenue growth. The current stock price seems now as much out of line to the downside at $3 as it did to the upside at $50 last year. AMBRO suggested $5 before the AT&T trials were announced. Gruntal has longer term targets of $15-20. We will probably get lots more media attention directed at targeted advertising (like we got this week on the West Coast and elsewhere).

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