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 : Smart Cards -- Ignore unavailable to you. Want to Upgrade?

To: John F Beule who wrote (166)	2/22/2000 12:05:00 PM
From: John F Beule	Respond to of 343

Feb 22 2000 9:15AM ET More on Tech Focus... Smart Cards Look for U.S. Breakout by Keith Kirkpatrick CNBC.com Contributor So-called "smart cards" ? cards with tiny microchips embedded in them that can hold all sorts of data ? haven?t reached the public?s consciousness in the U.S. yet. But the possible success of several IPOs related to smart cards may raise their profile in investors' eyes. These cards were all the rage a few years ago. But with the notable exception of American Express Co.?s {AXP} Blue, smart cards aren't widely used as they are in Europe. One company hoping to reap the rewards of a healthy market in Europe and a relatively nascent market for smart cards in the U.S. is ActivCard SA. The company recently announced its intention to proceed with an initial public offering of ADRs of about 4.6 million shares, according to the company. Moreover, ActivCard has partnered with Novell Inc. {NOVL} to provide strong authentication in Novell?s BorderManager Enterprise Edition 3.5. Baltimore Technologies post-IPO stock performance Meanwhile, Baltimore Technologies PLC {BALT} has watched its share price rocket upwards to about $200 a share, from an IPO price of about $27.50 a share. Baltimore Technologies makes a complete family of products and services to secure business conducted via computer networks, whether for Internet, extranet or intranet applications, including smart cards. The firm also announced in January its intention to acquire GTE CyberTrust Solutions Inc. for $150 million. Both of these firms have taken advantage of the strong demand for smart card technology in Europe, which has been driven by several factors that simply don?t exist here, says Andrew Phillips, a senior analyst with Dataquest Inc. Phillips points to the agreement of many European banks to support the Europay Mastercard Visa (EMV) payment standard used on smart cards for transactions as a major reason as to why smart cards are being rolled out with fervor in Europe. While the U.S. has had a solid communications network for checking credit-card verification, Europe has not, and fraud had been a major problem. As a result, there?s a greater incentive for introducing smart cards in Europe. "If your banks did switch to smart cards, they wouldn?t see a big improvement in fraud protection," Phillips says. "If we do it in Europe, we will see a big improvement." Another major reason why smart cards will likely flourish in Europe is the strong demand for pre-paid calling cards that can be swiped directly into public telephones. While these devices have cropped up in airports and hotels, the majority of public telephones in the U.S. require the user to either deposit cash or use a calling card number to complete a call. Moreover, smart card chips, often referred to as subscriber-identity module (SIM) cards used in GSM handsets, are also likely to be a volume play for smart-card chip manufacturers. While GSM is very popular in Europe, it lags the analog, TDMA, and CDMA digital networks here in the U.S., Phillips says. Combining those three applications, and there is a huge potential market for smart cards, says Phillips. However, "none of those applications have a compelling reason for issuance in the U.S., which is why you don?t see it." Still, there are a couple of potential applications that could eventually catch on in the States, provided that there are proper incentives for using the cards. The aforementioned Blue card from American Express is slated to allow Blue cardholders download applications from the Internet by laying in a supply of high-memory chip cards with 32 kilobytes of memory. The success of the card, however, will ultimately be determined by whether American Express provides enough incentives to get consumers to use it. "It will have to be American Express saying, ?if you want to buy something from our Web site using the card, we?ll give you 20% off,?" Phillips says. Other potential uses for smart cards include network-access cards, health-care cards containing medical data, and other cryptographic, digital-certificate based cards allowing access to Web sites for purchases or data retrieval. Smart cards could finally become as common as PCs in the U.S. very soon, Phillips says, noting that Dataquest is predicting that smart card readers are likely to begin to ship with PCs beginning next year.