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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: Jon Khymn who wrote (10385)	11/14/1999 11:19:00 PM
From: mkelly761	Read Replies (1) \| Respond to of 54805

Webmister, I believe IATV holds patents regarding the actual 'interactive' television such as changing cameras at sporting events. Also the ability to subscribe to a one time pay per view event. IATV looks good, but more DD must be done regarding the executive compensation plan traded for the "wolzien process"(patent). From what I have been able to research, they will be in the new set boxes. I believe LDIG owns 25% of IATV. So basically I guess my point is that the revenue stream must be researched as well as value of these patents they hold. If you do some DD on GMST you will find they deal with EPG/IPG. Good luck on your gorilla hunt. I am still not done reading my FM. So It is difficult to tell you whether it(IATV) is entering tornado like conditions. None the less they are both in my "basket". This no way implies that I have even correctly assembled a basket. Still Learning.

To: Jon Khymn who wrote (10385)	11/15/1999 12:55:00 AM
From: John Stichnoth	Read Replies (1) \| Respond to of 54805

John, how would you compare IATV with GMST? I don't know, even though I've been thinking about this pretty hard. Let's post what we find, eh? Best, JS

To: Jon Khymn who wrote (10385)	11/16/1999 2:32:00 PM
From: John Stichnoth	Read Replies (3) \| Respond to of 54805

Web Mister and THREAD--There have been a couple of comments here and on the Gemstar thread looking to compare GMST and ACTV (IATV). I decided to take a look. Here are my comments. To get this out of the way: IATV is not a Gorilla, and is a long way from getting there. Gemstar is close, and may even be one already. (Gorilla hunters who are already convinced of Gemstar may stop here, if you are in a hurry). What they do: Both companies are into Interactive TV, but their approaches are complementary or unrelated. They don't immediately compete except in the sense that they are both looking for advertising dollars. IATV's approach is to ally with existing channels and offer interactive inhancement, to enrich the viewing experience. GMST's approach is to develop specific technology, most of which will be viewed on specific channels, such as the TVGuide channel, soon. Comments on how they are doing in their missions follows these financial highlights: Financials: IATV GMST ---- ---- Mkt Cap 776.2MM 10,700MM Revenue (t4Q) 1.7MM 185.8MM Growth y/y--2Q +15% +27.5% 1Q +11% +27.1% 4Q +197% +26.5% 3Q +58% +36.1% EPS (t4Q) -93 cents +75 cents Other LT Assets 6.1MM 20.7MM LT Debt 4.7MM 32.6MM Equity 20.5MM 219.8MM Retained Earn. -84.9 -0.5MM IPR: Gemstar seems to have enabling technology patents, covering how the interactivity will work for their program guides. I do not have a sense that IATV's patents are very seminal. A patent search only reveals 6 patents for them. IPR ownership provides an important barrier to entry for Gemstar's competitors. This is not true for IATV. Value Chain: IATV is allying with content providers. They have announced a limited number of such alliances so far (4?), including eg Showtime. They have yet to intertwine their activities with the channels'. Their value chain does not yet exist. GMST's value chain includes all the VCR makers, and more and more set top box makers and TV makers. Their value chain is in place. Switching Costs: There are little switching costs for IATV's allies. If another company comes in and offers the same product to Showtime, there seems to be little to stop that competitor from doing so. For Gemstar, however, the box makers, TV makers, etc, have substantial switching costs if they contemplate moving from Gemstar's sphere. Profits: One criterion for Gorilla status is that the company must actually be able to show that they can turn a profit! Gemstar is now earning a reliable profit, that is growing quite steadily. IATV lost 93 cents a share over the 4 quarters ended 6/30, and has $84MM in accumulated losses. Balance sheet: Another criterion for Gorilla status is soundness of the balance sheet. IATV got an infusion of capital in early 1999, to bring equity up to $20MM. This is a long way from Gemstar's $220 MM. And, included in IATV's number is $6Mm in "Other Assets". I did not look further, but this number usually is where intangible assets are stuck. Gemstar's comparable number is $20.7 MM, a much smaller percentage of their Book Value. Conclusion: IATV may be for real, but I won't touch it. It's a long way from turning a profit, and there's nothing special that they are bringing to the table. In fact, I get the sense that there may be some pumping going on for this stock. As an outsider, I'm at too much of a disadvantage to play in that game. All my opinions only, of course. Best, JS