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Technology Stocks : WavePhore (WAVO)- VBI fed WaveTop for WebTV -- Ignore unavailable to you. Want to Upgrade?

To: Kevin who wrote (1819)	8/25/1998 8:39:00 PM
From: Paul K	Read Replies (2) \| Respond to of 2843

Dow Jones article from a Raging Bull board post: WavePhore CEO Sees 100,000 WaveTop End-Users By Yr-End By Rick Jurgens PHOENIX (Dow Jones)--WavePhore Inc. (WAVO) is comfortable with the earnings projections that were posted by First Call Corp. before a Wall Street analyst issued a sell recommendation on the company's stock last week and lowered estimates. Chief Executive Officer David Deeds also told Dow Jones the company expects to have 100,000 end-users for its WaveTop product for transmission of Internet data by the end of the year and expects to post advertising revenue in the fourth quarter. The company is said to currently have 20,000 end-users. Only two analysts currently follow WavePhore. One, Rob Martin of Friedman Billings & Ramsey, changed his investment rating to sell from speculative buy on WavePhore's stock last Wednesday, citing the risk of limited consumer acceptance of WaveTop. WaveTop supplements Internet service by delivering data to specially equipped personal computers through the broadcast signal of local Public Broadcasting Service stations. The service uses technology similar to that used to deliver closed-captions for television programs. Martin's sell recommendation was accompanied by a 12-month stock price target of $4, down from $20. WavePhore's stock dropped sharply on the news last week, before rebounding a bit Friday. Martin also changed his estimates for WavePhore in 2000 to revenue of $58 million, down from $100 million, and net income of 13 cents a share, down from 88 cents. Martin wrote last week that he was "not encouraged by the early signs of WaveTop becoming a major consumer success." He said he believed that only 20,000 to 30,000 users now subscribe to the service. WavePhore has been actively campaigning to defend its stock price and has been predicting rapid growth for WaveTop in the days following Martin's move. Deeds said WavePhore plans to get revenue from WaveTop by selling advertising and earning commissions from e-commerce transactions. The service is very new, he said. "We beta launched it in April, but we were only transmitting to a few stations, because we were trying to make sure that everything is right," Deeds said. "The full launch (with promotion) we really started July 1." Deeds wouldn't say how many end users the service now has. He said the service doesn't require subscriptions because the company provides free software to potential users. The only other analyst covering WavePhore, Ajay Varma, of First Albany Corp., said he thought Microsoft Corp.'s (MSFT) inclusion of WaveTop in Windows 98 and its small 3.5% equity stake in WavePhore are the best indicators that WaveTop would find acceptance from consumers. A WaveTop user must have a personal computer with a television tuner card. Such cards cost about $60, he said. According to the latest projections by First Call, a Boston company that tracks analyst estimates, WavePhore will lose a penny a share in 1999. Prior to Martin's change, First Call said WavePhore would earn 12 cents for that year. Deeds indicated WavePhore is comfortable with the earlier estimates. "All of the previous analyst reports, we're very comfortable with reaching all of those," he said. The Phoenix data broadcast company posted a net loss of $5.3 million, or 25 cents a share, during the second quarter that ended June 30, compared with a loss of $10.1 million, or 60 cents a share in the same period of 1997. In September, WavePhore will promote WaveTop by joining with CompUSA Inc. (CPU) and several tuner board manufacturers to offer rebates on tuner board purchases, WavePhore CEO Deeds said. Deeds also challenged Friedman Billings analyst Martin's assertion that WaveTop would be hurt by the departure of the unit's vice president of business development. "As far as I was concerned, it wasn't an announceable event," he said. "I'm not sure why that was brought up as a point." Deeds, who is also president of the WaveTop unit, said the unit's business has a strong management team in place. Martin also raised concerns about WavePhore's cash position in the face of the operating losses expected by analysts through at least the first two quarters of 1999. In the press release it issued last Thursday responding to Martin, WavePhore said it expects to have the cash to fund operations as well as possible stock repurchases that were authorized by its board Aug. 13. Deeds told Dow Jones that the board action merely "renewed and recertified" stock repurchase authority that the company has had most of the time since it went public in 1994. WavePhore's release also said the company respected Martin's decision to issue the sell recommendation, but that it didn't seem to be based on "full and comprehensive knowledge of our current business operations." Deeds told Dow Jones that he thought Martin's report was based on a "gut-type feeling" rather than research. Deeds also said that he was "irritated" that he learned about the report only eight minutes before it was issued. The Arizona Republic reported Sunday that Deeds said that he believed the sell order was issued because WavePhore had ended its investment banking relationship with Friedman Billings. Martin told the Republic that Deeds' charge was "ridiculous." -Rick Jurgens; 201-938-5099; richard.jurgens@cor.dowjones.com "Dow Jones News Service" "Copyright(c) 1998, Dow Jones & Company, Inc."