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To: Parker Benchley who wrote (4134)	1/30/1998 7:44:00 AM
From: KGoodson	Respond to of 4489

Bacon Butt News Service Talk of the Day :) BTW, IF you would like INFO for a Free Subscription to BBNS..EMAIL ME! Kerry SMARTALK TELESERVICES INC (SMTK) $28 7/8 and traded on the Nasdaq Stock Exchange.....This Los Angeles-based company makes prepaid phone cards, which let consumers make long-distance calls without paying the surcharges many phone companies add to their cards. Based on a three-minute, coast-to-coast call, SmarTalk charges customers an average of 50-60% less than rivals. Its cards also offer features such as three-way conference calling and voice fax mailboxes. These savings are luring customers. In the first nine months of 1997, SmarTalk cardholders used 91 million minutes of calling time. That tops the 67 million minutes racked up in all of 1996. That strong demand is expected to help SmarTalk post its first profitable year since it started out in 1994. Analysts expect the company to earn 16 cents a share in 1997, compared with a 31 cent a share loss a year ago. Earnings could hit $1.28 in 1998. "As in any emerging growth organization, you have a certain amount of infrastructure and development costs before you can get over the hurdle to profitability," said SmarTalk CEO Robert Lorsch. "We've soundly eclipsed the hurdle." Since SmarTalk buys millions of long-distance minutes, it pays less than a penny a minute. It sells its cards in 30, 60, and 120 minute blocks through mass retailers. Gross margins are about 40%. SmarTalk has been highly successful in securing exclusive distribution deals with major retailers, including Staples Inc., Best Buy Inc. and the Robinson's-May unit of May Department Stores. To do so, the company promises a retailer a share of the revenue from recharged minutes added by consumers to cards originally sold by the retailer. Recharged minutes are added electronically directly from SmarTalk. Depending on where customers buy the card, they usually pay 30 - 35 cents a minute. SmarTalk provides its phone services over MCI's and AT&T's long-distance networks. The MCI network is used with the company's own VoiceChoice switching systems in San Francisco which it bought from Pacific Bell in 1996. SmarTalk's revenue has grown at an astounding rate. In 1996, sales jumped to $15 million from just $1 million the year before. Sales should hit $70 million in 1997 and $330 million is forecast for 1998. Much of SmarTalk's growth has been fueled by Americans growing acceptance of prepaid phone cards. The cards have been used in Europe and Asia since the 1970s, but they have begun to catch on here only recently. In 1990, prepaid cards accounted for just a $20 million sliver of the $80 billion U.S. long-distance pie. In 1996, the cards generated $1 billion in sales. And that figure is expected to reach $2.6 billion by 2000. The reason? Prepaid cards are safer than phone-company cards. If a prepaid card is lost, a consumer loses only the card's face value. But with a phone-company card, a thief can rack up an unlimited amount of time using the consumer's pin number. But SmarTalk hasn't relied solely on internal growth. Over the past 15 months, it has snatched up several private calling-card companies, including GTI Corp, SmarTel Communications and ConQuest Telecommunications Services Corp. It also bought the retail prepaid calling-card business of Frontier Corp and American Express Co. In addition, SmarTalk inked a deal with Cendant Corp and Choice Hotels International Inc. to be the exclusive provider of prepaid cards in their hotel franchises. It also signed a deal with DCI Telecommunications Inc. to sell phone cards in the U.K. These moves helped boost the number of sites where SmarTalk cards are sold to 100,000. That's up from just 9,000 in early 1997. Lorsch saw the prepaid phone card industry's vast growth potential in 1994 while working in the advertising and sales promotion business. A phone company client asked him to write a business plan and marketing strategy for a prepaid phone card venture. When the client declined the proposal, Lorsch decided to give it a try himself. What set SmarTalk apart from other prepaid telephone card vendors at the time was Lorsch's decision to distribute his cards through major retail outlets. Talk is getting cheaper thanks to SmarTalk.

To: Parker Benchley who wrote (4134)	1/30/1998 9:36:00 AM
From: josrph j murphy	Read Replies (6) \| Respond to of 4489

Dear George: Good morning everybody! The next press release will hit the wires sometime between 4:30 P.M.today and Wednesday.The reason behind this is to catch flippers and short termers.I don't want to be predictable to them(g).Yesterday,we made some more money on SMTK and we were busy in both private and public purchases of our stock.Once the third wave hits I will be available to answer any and all questions.