RealTime IT News

eMailbag Monday: Readers Ask About GeoCities, PointCast, Vocaltec

Websteader GeoCities filed its first papers for an initial public offering with a goal of raising $72.45 million. Shares outstanding and share price are not yet indicated although we estimate GeoCities could be valued in the $375 million range, though not on current revenue but its user base and brand strength.

Latest quarter revenues hit $2.2 million vs. $4.6 million for all of 1997. Losses for the most-recent quarter ending March 31 were $2.9 million vs. loss last year of $1.2 million. Despite the lack of revenue, GeoCities huge installed base of users is what we're looking at for the value generator--if it can turn them into buyers.

With the IPO pipeline once again flowing for Internet stocks, let's grab a few reader emails. Here's a few questions about PointCast's planned offering and other Internet stocks in the news:

"Since PointCast's revenue growth has been flat after initial hope and hype, why would one expect it to change enough to warrant investing in it as an IPO?"

Reply: PointCast may need to find a way to re-introduce itself as a network management tool rather than bandwidth hog--the reason it was allegedly banned from intranets because too many users downloaded it and were receiving individual rather than corporate data feeds. NewsEdge (NASDAQ:NEWZ) has a strong lead in the corporate news delivery area, more than any other in terms of revenue. NEWZ hasn't had much recognition on Wall Street at all this year--its market cap was $170 million June 12.

Casting Vote

"I have tried every news push service in existence along with the leading data feeds for institutional Wall Street. If only Dow Jones, Bloomberg, Factset, Bridge, Baseline, Disclosure and others could implement the user-friendly interface of PointCast. With users in the millions, PointCast has built a "dedicated viewing audience". You know, the kind AOL inks $200 million deals over. PointCast should maintain its leadership position in push news and draw larger audiences through strategic affiliations with Internet portals (ie. search engines). Remember, PointCast has a product that complements most Web sites and does not compete or interfere with the "intentions" of Web site owners."

Reply: PointCast positioned correctly could be a bandwidth saver, rather than having every employee surfing Yahoo and Dilbert. PointCast has an intranet server product as does rival BackWeb. It has a chance to deliver on Wall Street, but maintaining a software client isn't cheap, and Microsoft added Active Channels pulled push into the OS, before push became a has-been. 'Push' time will come, but as 'knowledge and bandwidth resource management' tools and data distributors.

Another Reader Point

"PointCast has evolved nicely from its original product. However, in spite of channels, I feel the information collected is still too diffuse and copious. As an information-hungry person, the Pointcast results are not all bad, but tighter user control of results would be very nice. All that to say that maybe other people feel the same way--room for improvement. The stock then becomes a "base hit" but not a "grand slam."

Not Nerd, Nets

"Well, it's the revenge of the net stocks. You called it."

Reply: April peaked, May sunk and June is finding some renewed interest in Internet stocks. We expect a handful of IPOs to come between now and the end of the year with Fall being a busy time. Keep an eye on ISDEX, The Internet Stock Index, as the barometer of how the market is doing. If it rises then look for more IPOs, if it drops then perhaps not.

Phone It In

"I would like to hear your thoughts about why VOCLF's stock is dying so badly when it's clearly a technology leader with big time partners and revenues?"

Reply: Vocaltec (NASDAQ:VOCLF) shares gained on its deal with Deutsche Telekom last year that bumped its share price to highs. Since then, Vocaltec, which makes the popular Internet Phone software client, has been focusing much of its energy and resources on the server side with gateway products--network call center-type solutions. These run the IP communications networks of tomorrow, being deployed only just now in startups like ITXC.

On June 9, Vocaltec and Lucent (NYSE:LU) announced an agreement to interoperate products in the IP telephony area, a positive sign of Vocaltec's clout and presence. Another positive news byte: On June 5, VocalTec and leading network integration firm Digital (NYSE: DEC) inked a global alliance to market end-to-end, carrier-grade, IP communications solutions. IP-based communications may take over most if not all communications, and Vocaltec could increasingly be a factor here.

Note: look for GeoCities 'inside the numbers' IPO analysis tomorrow in Internet Stock Report.