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Technology Stocks : Tumbleweed Communications Corp. (TMWD) -- Ignore unavailable to you. Want to Upgrade?

To: Jacques Chitte who wrote (264)	2/17/2003 7:16:05 AM
From: Glenn Petersen	Respond to of 290

With PayPal acquisition, eBay gains an enemy By Associated Press, 2/17/2003 boston.com SAN FRANCISCO -- When eBay Inc. bought online payment provider PayPal, the Internet auction site inherited a new foe. Tumbleweed Communications Corp., a tiny software company, has made a potentially large patent claim, saying it owns the technology for the personalized links that PayPal sends via e-mail. The links direct customers to private information about their online transactions. If successful, the patent lawsuit could cost eBay millions of dollars and enable Tumbleweed to turn the corner after years of steady losses. ''No one has ever heard of them, but winning this claim would really put Tumbleweed on the radar screen,'' said Fulcrum Global Partners' Alan Weinfeld, one of the few securities analysts who follow Tumbleweed. Redwood City, Calif.-based Tumbleweed claims the PayPal links infringe on its technology, which gives an e-mail sender a secure way to guide the message's recipient to unique content on a Web server. Tumbleweed sued PayPal in May 2002 and added eBay as a defendant in September, a month before the auctioneer completed the $1.5 billion takeover of the payment service. The suit seeks unspecified damages and a court order to stop further uses of personalized links without royalties. Tumbleweed also has a similar case against Yahoo Inc. Tumbleweed had 2002 revenue of $25 million compared with $1.2 billion for eBay and $953 million for Yahoo. Both eBay and Yahoo have brushed off Tumbleweed's patent claims as meritless. ''We look forward to vigorously defending our position in court,'' eBay spokesman Kevin Pursglove said. Jeff Smith, Tumbleweed's chief executive, said, ''They seem to think of us as some kind of dot-com that is going to go out of business within the next two years. But we have a high degree of confidence that we are going to be around to win this case.'' Bolstered by favorable court rulings in previous lawsuits, Tumbleweed has extracted licensing agreements from, among others, online greeting sites run by Hallmark and American Greetings. Two months ago, Tumbleweed got its most lucrative settlement so far. DST Systems Inc., which uses e-mail links to notify E-Trade Group customers about financial information, agreed to pay more than $1 million in back royalties and 4 cents for every future message. In its last quarterly report, filed in August, PayPal's payment service was operating at a pace that would generate about 115 million transactions annually. At 4 cents apiece, that would translate into $4.6 million annually. EBay could be held liable for triple damages. Founded in 1993, Tumbleweed makes a variety of e-mail software, including encryption tools and spam filters. Since its inception, the company has lost $270 million, including $205 million in the past three years. Tumbleweed's stock, which peaked at $136 per share in 2000, recently has been trading at about $1.20. To survive, Tumbleweed halved its payroll, to 135 employees. This story ran on page C4 of the Boston Globe on 2/17/2003. © Copyright 2003 Globe Newspaper Company.