Neidiger, Tucker, Bruner Inc. issued a speculative buy on ACTV today.
there are 3 main reasons they cite.
1. The 5 million investment while small assures the launch of the Dallas regional sports network. While timing is still in the air
(we think 90-120 days from now there should be a critical mass of 50,000+ digital subscribers), the company is financially positioned to succeed.
2. the investment in liberty endorses the company and its technology as a bona fide member of the cable community. A number of exec from other cable companies attended the intro in New York and exhibited a high level of interest to demonstrations of the technology.
3. The joint venture which will explore other applications creates another layer of opportunity for ACTV. While Dallas mat have 50,000 digital subscribers by year end a total fo 1.3 million General instrument digital set top boxes have been installed nationwide out of 1.7 million shipped. Additionally, 600 headend systems have been installed, which is over 40% of the total market representing 28 million homes passed. The total of boxes could approach 1.8 million by year end, all of which are compatible with ACTV fourplex technology.
The pullback in the price of ACTV's stock appears to be reflective of the limited nature of Liberty's investment, a still uncertain timetable and a possible lack of understanding regarding the magnitude of the "other applications". But let's explore the outlines of the opportunity.
STRONG INTELLECTUAL PROPERTY POSITION
Actv is a holder of 18 patents surrounding individualized TV, including seamless video switching, use of memory for video sequencing and storing video choices, streaming internet video on a TV and so on. Further, this technology is "eloquently simple,it is extremely low in cost to deploy and will be included in open cable standards now under development.
So ACTV programming can be offered nationally to over a million TV sets today. Consider this -Liberty Media has a 50% interest in fox sports net and the other half is owned by Fox Sports, which is now involved in the national broadcast of many different sporting events. ACTV has established a high level of sports event production skill which makes this an obvious opportunity. David Jensen, a liberty media exec, has also mentioned in recent interviews music as well as the programing offered in ACTV's California test bed which included news, games and children shows as areas of potential application.
A look at the attached list of liberty media's program portfolio underscores the breadth of opportunity. Importantly, using ACTV's unique cutting edge programing technology, liberty should significantly improve its ability to obtain carriage agreements for this content.
other headings included
HYPER_TV BROAD BAND APPLICATION
INDIVIDUALIZED ADVERTISING
ACTV NET
OUTLOOK
The simplicity and minimal cost of creating "four-plex" broadcasts, storing viewer choices in memory, launching internet web sites to compliment video, etc, gives liberty media cable industry partners an arsenal of unique features that will enable a strong competitive response to Digital Broadcast Satellite while driving subscriber growth and increasing revenue per subscriber.
With the launch of Fox Sports Plus Southwest still several months off, the timing of other regional sports networks also unclear and the specifics of liberty's plans for the joint venture still not known, it is difficult to model the entertainment side for the coming year. However it is our belief that John Malone sees ACTV programing tech as a way to leverage Liberty Media's large portfolio fo programming and we 1999 to be an exciting year. our projections assume that ACTV entertainment's share of revenues could be 5-10MM in 1999 and ramping through the year. The education side could generate 2MM for 1998, rising to 7MM in 1999. Our sense is that the year 2000 will be a breakout year for the company with revenue potential in the 30-50MM range. However, we estimate GI box shipments at 200,000 per month and ramping. And with Scientific-Atlanta entering the digital set top box market in early 1999(ACTV is in negotiations to adapt its code to this pre-open cable design unit), the number of digital set top boxes installations could grow 2 fold to 4 fold by 1999 year end.
CONCLUSION
Weretain our speculative buy rating for ACTV for risk oriented investors and believe the stock is poised for a higher valuation in the market as Liberty Media's strategies unfold for ACTV technology.
This is most of it but I have to go to dinner now. enjoy and sorry for the typos
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