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ISDEX Shuffles: VocalTec Calls One In, CyberCash Beyond Nickels

ISDEX, The Internet Stock Index, shows slight gains as a group since November 11. Of this group of 50 stocks, two blasts from the past top the list: VocalTec and CyberCash.

First VocalTec (NASDAQ:VOCLF). Amazing when you consider that there's only a few "IP" communications pure play stocks in existence. "IP" (Internet Protocol, the lingua franca of the global computer network). VOCLF shares are up 24% the past week leading all ISDEX gainers, yet still off 40% for the year.

An agreement with Cisco (NASDAQ:CSCO) to make their respective IP communications products "speak" to each other (so to speak), drove up VOCLF nearly 34% November 12. The news itself didn't seem that big but it did highlight what VocalTec has been plodding along doing for several years now: leading the packetized voice over Internet industry.

ISDEX ®   17-Nov-98 % change Point change % change
The Internet Stock Index   close from from from
www.isdex.com     03-Nov-98 03-Nov-98 31-Dec-97
          or from IPO*
ISDEX   207.35 1.0% 2.09 107.6%
NASDAQ   1,878.52 0.7% 12.90 19.6%
DJIA   8,986.28 1.4% 122.30 13.6%
           
VocalTec VOCLF $12.38 24% $2.38 -40%
CyberCash CYCH $10.88 23% $2.06 -14%
CNET CNWK $59.00 19% $9.63 290%
N2K NTKI $10.81 16% $1.50 -26%
Amazon.Com AMZN $148.50 13% $16.75 393%
Earthlink Network ELNK $56.06 12% $6.00 335%
Lycos LCOS $60.50 11% $6.13 192%
Onsale ONSL $22.88 11% $2.31 27%
CDnow CDNW $13.25 10% $1.25 -17%
Spyglass SPYG $17.75 8% $1.31 259%
CheckPoint Software CHKPF $29.38 7% $2.00 -28%
24/7 Media* TFSM $18.13 7% $1.13 29%
ISS Group* ISSX $37.13 5% $1.88 69%
Beyond.com BYND $16.44 4% $0.69 83%
America Online AOL $150.75 4% $6.25 233%
Netscape NSCP $29.25 4% $1.13 20%
Broadvision BVSN $15.81 3% $0.44 143%
Cisco CSCO $68.75 3% $1.75 85%
@Home Network ATHM $49.38 3% $1.25 97%
Verisign* VRSN $37.38 2% $0.88 167%
Excite XCIT $52.69 2% $1.06 251%
Inktomi* INKT $132.00 1% $1.88 633%
Open Text OTEXF $14.00 1% $0.13 5%
GeoCities* GCTY $42.75 1% $0.38 151%
Sportsline USA SPLN $16.44 0% $0.06 53%
Yahoo! YHOO $176.75 0% $0.19 410%
Mecklermedia MECK $28.50 0% -$0.13 15%
Security First Technologies SONE $17.00 -1% -$0.13 134%
E*TRADE EGRP $22.50 -1% -$0.25 -2%
Network Associates NETA $45.94 -1% -$0.63 -13%
Infoseek SEEK $35.75 -2% -$0.63 233%
eBay* EBAY $128.63 -2% -$2.25 615%
Egghead.com EGGS $13.63 -2% -$0.25 110%
Exodus* EXDS $33.94 -2% -$0.69 126%
Axent AXNT $24.13 -2% -$0.50 40%
Mindspring MSPG $56.06 -2% -$1.31 400%
PSINet PSIX $17.88 -2% -$0.44 249%
Verio* VRIO $16.19 -4% -$0.69 -30%
Network Solutions NSOL $64.50 -4% -$2.75 391%
Doubleclick DCLK $34.88 -5% -$1.81 105%
CKS Group CKSG $26.63 -5% -$1.50 88%
CMG Info CMGI $74.38 -6% -$4.88 392%
USWeb USWB $18.88 -7% -$1.38 101%
Broadcom* BRCM $88.81 -8% -$7.69 270%
Open Market OMKT $7.88 -8% -$0.69 -18%
Concentric CNCX $25.75 -8% -$2.25 190%
Broadcast.com* BCST $49.75 -10% -$5.50 176%
IDT Corp IDTC $18.19 -12% -$2.44 -10%
RealNetworks RNWK $41.25 -14% -$6.50 197%
Security Dynamics SDTI $10.88 -16% -$2.13 -70%
*1998 IPO

There's also a tad bit of irony in VocalTec still pioneering what an Internet phone call and call center is, but getting nothing but "busy" signals from Wall Street. To give it some historical perspective, the last time VOCLF shares traded north of $30 a cigar was for smoking and not a footnote in the Starr Report.

VOCLF trades at a typical software stock range of 5x annualized revenue. For its September quarter revenue hit $6.5 million with a $3.9 million loss. For 1999 we think VocalTec could show some upside as and if the expected market for IP telephony starts to find its way into corporations.

Yes, the sound quality (for home users anyway) today reminds some listeners of the glorious days of AM radio (or a typical broadcast coming off Broadcast.com). But inside the firewall on fat pipes IP telephony, with the new things you can do with it with virtual PBX, call centers, forwarding, broadcast calling, groupcalls, etc., looks very promising to us.

Said another way, at what we think its "venture capital-like" valuation, VocalTec looks like a possible R&D plug and play candidate for a larger networking/IP/backbone player.

On another back-from-the-bog story, CyberCash (NASDAQ:CYCH), the transaction firm with more in common with a William Gibson novel than anything in years past, has slowly migrated to a non-virtual business model with credit card merchant service authentication over the Internet abilities.

In fact CyberCash's consumer services are only a small part of its institutional, merchant, and financial industry solutions. November 16 it announced that Netscape (NASDAQ:NSCP) incorporated CyberCash credit and check payment services in Netscape's BillerXpert Internet bill payment application.

The other big climbers in ISDEX the past week all rode the e-tail bonanza that we said was coming (see Internet Stock Report, November 10). Investors doing a little holiday shopping snatched up shares of book-music-video-gift seller Amazon.com.

Meanwhile, CNET also rose on e-tail expectations for computer sales, up 19% to $59, followed by N2K (NASDAQ:NTKI) with a 16% jump to $10.81 per share on two things: 1) its pending merger with CDnow and 2) NTKI shares had room to run given a large dose of ignoring them from Wall Street most of the past few months.

Of the dogs and duds of the week, we continue to wonder what's wrong with Security Dynamics (NASDAQ:SDTI), down 70% year to date and 16% this week. SDTI posted $40.8 million third-quarter revenue and $3.2 million net income. While net income was lower than the previous year revenue growth was 14% vs. 3Q97. Also, we wonder how many tire kickers know that SDTI has $153 million cash. That means we think SDTI trades effectively at about 1.5x next year's revenue.



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