Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: SpudFarmer who wrote (52803)	12/6/1999 7:28:00 PM
From: Jenne	Read Replies (1) \| Respond to of 152472

ANALYSIS-Certicom stock soars but doubts surface By Susan Taylor OTTAWA, Dec 6 (Reuters) - Investors continued their affair with market darling Certicom Corp. <CIC.TO> on Monday, sending stock in the encryption software developer to flirt with a new 52-week high, but some analysts suggested the infatuation may soon fade. Shares in the Toronto-area firm peaked at C$66 on the Toronto Stock Exchange on Monday before edging back to close at C$60, a $1 gain. The increase is the latest in a stellar performance staged by the stock, which has gained 193 percent from its November 1 close of C$20.50. Certicom sells security software and consulting services primarily for use in wireless equipment -- phones, palm computers, smart cards and Internet content protection, for instance. "They have the tiger by the tail here," said Josef Vejvoda, analyst National Bank Financial in Toronto who has a "buy" rating on the stock and expects to upgrade his 12-month target of C$60. Last week Certicom announced a deal with San Diego, Calif.-based Qualcomm Inc. <QCOM.O>, which sells wireless phones. Details of the agreement were not released. Certicom said during a December 1 conference call with analysts that more deals are set to be announced, according to Brandon Osten, analyst with Sprott Securities Inc. in Toronto. "Some of these announcements relate to content protection, for example selling music over the Internet," said Osten, who has a "speculative buy" on the stock and plans to upgrade his target of C$50. Certicom already supplies technology to such firms as Santa Clara, California-based computer networking firm 3Com Corp. <COMS.O, Schaumburg, Illinois-based telecommunications and technology firm Motorola Inc. <MOT.N>, and BellSouth Corp. <BLS.N> wireless data division. But its market does face uncertainty as some patents held by Certicom's main rival, Bedford, Massachusetts-based RSA Security Inc. <RSAS.O>, are set to expire beginning next year. "Encryption right now is kind of an up-in-the-air market...are people willing to pay for Certicom's elliptic curve (products) when they can get RSA for free and how much are they willing to pay?" asked Osten. Certicom technology is seen as faster and taking up less room than RSA's, but some market watchers suggest that Certicom's surging stock is ahead of itself. The stock is trading at 20-times its forward revenue, Osten said, beating the firms he dubs high-flyers, which trade at 15-times revenue. "This is a company that has missed an awful lot of revenue forecasts, so until Certicom is able to start reliably hitting those numbers I'm not going to have some crazy aggressive numbers (forecast) here," said Duncan Stewart, fund manager at Tera Capital Corp. in Toronto. "Yes, they're signing all sorts of licensing deals, but they signed all sorts of licensing deals years ago and we haven't really seen the results of those yet have we?" Certicom stock was limping at C$8 in late 1998 after jittery investors fled the firm when it failed to meet expectations. The company does does have heavy hitters in its camp, Vejvoda said. Both Motorola and Microsoft Corp. <MSFT.O> co-founder Paul Allen own 5 percent stakes in Certicom. ($1=$1.47 Canadian) REUTERS Rtr 18:23 12-06-99