FVCX >>> CEO comments on CBS, "Comfortable" with estimates
FVC.COM calls 1999 an 'inflection year'
Finally, future of video conferencing looks less fuzzy
cbs.marketwatch.com.
By Darren Chervitz, CBS MarketWatch
Last Update: 3:58 PM ET Feb 23, 1999NewsWatch
SAN FRANCISCO (CBS.MW) -- After years of disappointing investors, the video conferencing market will begin to take off this year, said a high-ranking executive at FVC.com.
"Nineteen hundred and ninety-nine is an inflection year," said Ralph Ungermann. "We all know the video conferencing market hasn't taken off, but we see it coming sometime in the near future."
FVC.com (FVCX), which went public last year at $13 a share under the name First Virtual, makes networking software and hardware that allows for the transmission of video.
The video conference market will hit $300 million in 1999, Ungermann predicted, adding that FVC.com will capture a "substantial part" of that total. (BancBoston Robertson Stephens analyst Paul Johnson estimates that FVC.com will generate $70 million in sales this year). And the market should grow to about $3 billion in 2001, the chairman said.
Demand for video conferencing applications will pick up, but more importantly, the broadband fiber optic networks rapidly being built have finally made interactive, theater-quality video possible, Ungermann said.
Distance learning is the primary use for video conferencing, but "business-to-business commerce will be the killer app going forward," he said.
FVC.com's networking products work with a variety of video access devices from companies like PictureTel (PTEL), VideoServer (VSVR) and Vtel (VTEL). However, the company also sells its own access device, which Ungermann said will give FVC "a lot of growth in the second half" of 1999.
Francis Milano, director of investor relations for VTel, said his firm isn't worried about the competition. FVC.com is "making the whole industry move more quickly. Its broadband tools are highly popular and creating demand for all of us" he said.
Nearly all of the video conferencing players have fallen short of analysts' expectations due to slower-than-expected adoption of the technology. FVC.com is no exception, falling short of its internal goals in the fourth quarter.
Ungermann said the company is comfortable with analysts' reduced estimates for the first quarter, as several projects that were signed late in the fourth quarter will be booked.
The company is also in the early stages of negotiating to offer its products with various telecommunication service providers, such as Qwest and Bell Atlantic. "[Video] is exactly what they have to have," Ungermann said, citing the low-margin nature of providing access to voice and data.
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