Here's another good piece on ONT, looks like a great play as long as it stays above 17...
Editorials
Sunday, March 19, 2000
On2.com: On the Leading Edge of Broadband Technology
By Bill Gamble
On2.com (ASE: ONT) is a global leader in broadband content and delivery over the Internet.
Headquartered in New York City in the heart of Silicon Alley, On2 is leveraging its expertise in
video compression and streaming technology to create the Internet's first network of Web
channels designed exclusively for broadband consumers.
The adoption of broadband, or high-speed access to the Internet, represents the most
important development in information technology since the World Wide Web popularized the
Internet itself. On2.com is poised to revolutionize the consumer experience by developing the
first Internet network that combines the best elements of television with the interactivity of the
Web.
On2's current success is rooted in cutting-edge technology. Formerly named The Duck
Corporation, On2 has been a leading developer of software-based video compression and
streaming technology for over eight years. Microsoft (NASDAQ: MSFT) has licensed versions
of its "TrueMotion" technology as a standard component of Windows 98 and Windows Media
Player, and by Sega for use in the Saturn and Dreamcast video game systems.
On2 offers a product that's like RealNetworks' (NASDAQ: RNWK) RealPlayer, but for the
broadband space. It streams video and audio over broadband pipelines such as DSL, T1 or
cable lines. But unlike RealPlayer, On2.com's product offers full-screen, full-motion video.
While RealNetworks and Microsoft are developing products in this market as well, On2.com's
early entry is a plus.
By leveraging its next generation proprietary technology platform, TrueMotionVP3, On2.com
delivers full-screen, full- motion, television-quality video over the Internet at data rates low
enough (300 kilobits/second) to allow consumers to access and view this video in real time, on
demand, and without waiting for downloads.
On2Movies, the first channel in the On2Network, features high- quality On2-branded
programming as well as content from major studios and independent filmmakers. Future On2
channels slated for rollout during 2000 will cover other popular areas including music, travel and
games.
On March 13, 2000 On2.com announced that it had signed a definitive agreement to acquire
QuickBand Networks, a Los Angeles-based aggregator and retail distributor of broadband
entertainment content.
As a result of this acquisition, On2.com will expand its technical production capabilities to
more quickly enable third- party developers and content providers to utilize On2.com's
technology. On2 will also gain a national distribution channel for its technology platform with
leading retailers including Best Buy, Tower Records, Virgin Megastores, and Amazon.com.
QuickBand currently acquires short-subject independent films and music-related content, as
well as footage of celebrity interviews, concerts and events, and repackages them for
broadband distribution over the Internet and in DVD editions sold through national retailers.
On2.com plans to apply its full-motion, television-quality video streaming technology to all
QuickBand content.
"Acquiring QuickBand furthers our strategy to showcase superior entertainment content to
broadband consumers using On2 technology," said Dan Miller, On2.com Founder, President
and CEO. "Most importantly, the acquisition of QuickBand's technical production facilities,
coupled with its national retail consumer network, will allow us to more rapidly extend the
reach of our technology to end-users."
"Combining On2's broadband technology expertise with QuickBand's production and
distribution channels makes this a compelling acquisition for all parties," said Paul Nadel,
President and CEO of East/West Capital Associates, the largest shareholder of QuickBand.
"This deal will make On2.com's advanced technology accessible to ever greater numbers of
broadband Web users."
On February 14, 2000 Kaufman Brothers analyst Nitsan Hargil issued a 2 page Daily Notes
Report on On2.com. Report highlights: 'The 1999 EPS estimate was raised to ($0.37) from
($0.47), to reflect the company's new aggressive strategy. The 12-month price target was
raised to $45 from $37 per share. A BUY rating was maintained.'
Jeff Hirsch, vice president of HirschOrganization.com, an investment research company, likes
the stock. Presently trading at less than half its 52 week high, On2.com is trading below
Hirsch's buy point. He thinks it's a good time to buy it. When more consumers shift towards
DSL and other fast Internet access lines, he said, On2.com should gain popularity.
On2.com closed at 18 on Friday. Its 52-week high was 40 3/4 and the year's low was 7 1/16.
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