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To: SalmonMan who wrote (66505)	4/6/1999 3:25:00 PM
From: Mr. Big	Read Replies (2) \| Respond to of 119973

Picking up IDTC and FVCX here - great momentum --> more details The leader in wiring Internet videoconferencing is FVC.com (FVCX). The company, formerly known as First Virtual, sells videoconferencing software, which was previously bought mostly by companies like PictureTel and Polycom (PLCM), who repackaged it with their own videoconferencing systems. But now that corporations have upgraded their networks to accomodate Internet traffic, FVC's software can run well on a PC over these improved networks. That means the company's sales opportunities have multiplied. Over the next three years, analysts expect FVC's earnings to rise at a 43% rate. With a 1999 P/E of only 23, the stock looks cheap. Three of the five analysts who follow it rate it a Strong Buy. Two others rate it Moderate Buy. FVC's software uses Internet protocols, which travel over telephone lines in random order and come back together at their destination in a larger framework, ATM. ATM is gentler on bandwidth and local servers than the straight Internet protocols sold by FVC's competitors, says H.C. Wainwright analyst Jason N. Ader. This allows the network manager to direct the video over the high-bandwidth lines and use low-bandwidth lines for less taxing voice transmissions. That, says Ader, makes FVC's solution the most "effective" one for the next few years. As analyst Jim Stone of Preferred Capital Markets explains, bandwidth problems -- too much information for a pipe to carry and translate at once -- cause holes in pictures, delays in lip-sync or other annoying failures. To that end, FVC has adopted MPEG-2 technology, which helps eliminate a lot of those problems. (System vendors like Polycom and PictureTel can't enable an average network to reach that standard as reliably as FVC can.) FVC also offers cards, encoders and caching software to help companies optimize their existing Internet connections. FVC, which has been selling network software for desktop multimedia applications since 1994, improved its Internet product line last year when it bought Internet videoconferencing software specialist ICAST for $8 million, using money it raised in its April IPO. FVC's chairman, Ralph Ungermann, was also a founder of Ungermann-Bass, an early builder of corporate networks, which he sold to Tandem Computers for $260 million in 1988. In January, Ungermann ceded FVC's CEO chair to Rich Beyer, former COO of chipmaker VLSI. This frees Ungermann to more energetically court potential buyers of FVC's products. His challenge? Ader says it's to establish videoconferencing as part of a company's long-distance service, not a piece of equipment. In that pursuit Ungermann has enlisted the help of telecom providers Lucent Technologies (LU) and Nortel (NT). FVC is also courting service providers such as Qwest (QWST) and Global Crossing (GBLX), which plan to offer high-margin videoconferencing services to their new customers. So far FVC makes 25% to 35% of its sales to educational institutions, says Stone, and has yet to crack the service provider market. Selling videoconferencing won't necessarily be a cinch. A $1,000 desktop system still costs twice as much as a good conference phone and generally can't follow a speaker's body or voice. That's not a problem for educational applications like lectures. But it costs at least $5,000 to get a system that can efficiently connect two conference rooms full of executives who've got a lot to say. Roughly 10% of the three to five million conference rooms in the U.S. have audioconference equipment, says analyst Stone. If half of those added video capabilities, the videoconferencing industry would double. And that's not a lot to ask. Analyst John Todd of C.E. Unterberg, Towbin, forecasts 30% annual growth in videoconferencing between now and 2004. If FVC maintains its technological edge, it's likely to get a big chunk of that business.