Download this document:
  • Microsoft Word
  • MS Word 6 (older)
    		•

      -- Access Pharmaceuticals

    -- ACTV
      + Update 05-17-99
      + Update 04-14-99
      + Update 03-03-99
      + Update 01-26-99
      + Initial Opinion
      + Financial Model

    -- Advanced Tissue Sciences, Inc.

    -- AMBI Inc.

    -- ARIAD Pharmaceuticals, Inc.

    -- Cell Therapeutics, Inc.

    -- CTC Communications

    -- Cubist Pharmaceuticals, Inc.

    -- Cypress Bioscience

    -- CytRx Corp.

    -- Exigent International, Inc.

    -- FutureLink Distribution Corp.

    -- Hemacare Corporation

    -- Medarex, Inc.

    -- Valentis, Inc.

     




    AMERITRADE
    DATEK
    Discover Brokerage
    DLJDirect
    E-Trade
    Schwab




    To receive immediate notification of research updates, enter your e-mail address here (ex: name@domain.com):


    		  

    January 26, 1999     RECOMMENDATION:BUY

    ACTV, Inc. (NASDAQ: IATV)

    Scientific-Atlanta's Set-Top Box to Support ACTV's "Individualized Television";
    Agreement Ensures Access to Virtually 100% of US Cable Subscribers

    Market Data:

    
Exchange Symbol.....................IATV (NASDAQ)
Price of Common Stock (01/25/99)............$5.88
30-Day Average Trading Volume............425,000
Shares Outstanding..........................28.4M
52-Week High/Low......................$6.50/$1.37
    ACTV Corporate Information:

    
Address....................1270 Avenue of the Americas
...................................New York, NY  10020
Telephone.................................212-217-1600
Chairman & CEO......................William C. Samuels
CFO...............................Christopher C. Cline
Website...................................www.ACTV.com

    Recent Developments
    ACTV, Inc. ("ACTV") and Scientific-Atlanta, Inc. ("SA") announced today that an agreement had been reached whereby ACTV digital programming technology would be available on SA's Explorer( 2000 advanced digital set-top boxes. We believe this is a very significant corporate milestone for ACTV, as it represents validation of ACTV's technology by a second leading producer of digital set-top cable boxes (ACTV has an agreement with General Instrument, the other major manufacturer), and ensures access to ACTV software technology in virtually the entire US cable subscriber base. We reiterate our BUY recommendation on ACTV common stock by investors tolerant of the risks associated with micro-cap and small-cap equity investments.

    Digital Set-top Box Market in the US: SA and General Instrument ("GI"), with which ACTV already has a similar agreement, currently represent 100% of the US digital set-top box market. Although we expect others to eventually offer digital set-top boxes, we believe SA and GI will dominate the market for the foreseeable future. SA has received purchase orders or commitments for the Explorer 2000 product from 14 cable operators representing more than 16 million cable subscribers, including TimeWarner, Cox, Comcast, Aldephia, Rogers and Videotron. SA is aggressively marketing its Explorer 2000 digital boxes, and we refer the reader to SA's corporate website at www.SciAtl.com for a series of recent announcement pertaining to deployment of the Explorer 2000.

    ACTV/SA Agreement: SA has established the CreativEdge( program to encourage third-parties to develop applications that work on the Explorer platform. ACTV engineers will work with SA staff to port the ACTV software technology to the Explorer platform. ACTV's patented programming technology will be integrated into the Explorer platform, and will be made available both on new installations of the Explorer 2000, and be downloadable to the Explorer 2000 installed base.

    ACTV Background: ACTV, Inc. ("ACTV") is developing innovative, patented software technology, and managing relationships with leading programming and distribution entities, that we feel position the Company to capitalize on the opportunities arising from the convergence of the Internet and digital cable TV -- the broadband cable infrastructure. The first application of Individualized Television is the sports entertainment market, and the first application of HyperTV is the on-line education market. As the cable operators deploy the next generation of digital cable boxes throughout their networks, the Internet and broadband cable infrastructures will converge, as will the potential applications of ACTV's technologies. We believe the potential applications for Individualized Television and HyperTV are very broad, and include interactive advertising, electronic commerce and a host of enhanced, interactive entertainment programming.

    Convergence of Cable TV and Internet -- What's it all about?

    Companies like General Instrument and Scientific-Atlanta are adding manufacturing capacity to produce digital cable boxes as fast as possible. Cable companies like TCI, Cox and Comcast are rushing to deploy these digital cable boxes throughout their cable networks. AT&T is acquiring TCI to gain access to TCI's broadband cable distribution into homes (incidentally, this ensures the upgrading of TCI cable network to fully digital, which, in turn, will force other cable operators to upgrade their systems). And AOL is spending time and money in Washington, D.C. to make sure they have equal access to that broad cable infrastructure. What's it all about?

    We believe these companies, and others, are jockeying to get ownership, control or access to the cable entering your home. As the infrastructure is deployed, companies will offer a wide range of products, services and programming through that cable, including Internet access, telephony, and enriched entertainment programming. This latter category, the enriched entertainment programming, will include interactivity with the television, combined video and Internet information, viewer-defined programming and advertising, and virtual environments for learning and shopping.

    Question: With respect to the question of HDTV, or higher-definition television, are you going to watch more TV because the picture is bigger, or "more blue," or a bit clearer? We don't think so.

    Question: Are you going to watch more TV because the broadband cable network provides for "multi-casting," or the ability to bombard the homes with 500 channels instead of 60? Again, we don't think multi-casting represents the real value in the broadband cable infrastructure.

    Answer: We believe the real value in the broadband cable infrastructure -- value for viewers, programmers, distribution companies and advertisers -- will be in the provision of enriched home entertainment programming and services. ACTV has cleverly positioned itself to capitalize on these trends, with unique patented software technologies, content and tools for programmers and educators, and with strategic alliances and partners who stand to gain economically from the deployment of ACTV's technology.



    Investment Highlights

    I)   Proprietary, Enabling Software Technology -- Individualized Television and HyperTV
    1. ACTV's Individualized Television provides the tools needed to create, encode, distribute, decode and view live or pre-recorded television programming that individualizes what the viewer sees and hears for an unlimited number of simultaneous viewers;

    2. ACTV's HyperTV software technologies uniquely enable simultaneous delivery of video and Internet content to television users;

    3. ACTV's proprietary technology enables and enhances potentially large programming applications, from sports to music to interactive advertising and e-commerce.


    II)   World Class Corporate Alliances and Customers
    1. To drive commercialization of its technologies, ACTV has partnered with Liberty Media (an equity owner), Tele-Communications, Inc. (TCI), General Instrument (an equity owner), Fox Sports Net and Sun Microsystems. Agreement with Scientific-Atlanta ensures access to virtually 100% of the US cable TV subscriber market.


    III)   Compelling Valuation -- Follow the Smart Money
    1. We believe ACTV's investment case is not widely understood or appreciated by the investment community, and that its shares trade at a significant discount to comparable companies;

    2. Follow the "smart money": John Malone's Liberty Media recently purchased a $5 million, 10% equity interest in ACTV and has options to invest another $5 million; Tudor Investment bought 1.4 million shares this quarter.




    For Additional Information
    Contact SmallCaps Online LLC -- 212-554-4158

    Sources for Additional Information

    The following are website addresses offering related information, and links to other sources of information.

    www.ACTV.com ACTV's corporate website
    www.SmallCapsOnline.com SmallCaps Online's site for company information and research
    www.FCC.gov Federal Communications Commission homepage (information on digital TV)
    www.NAB.org National Association of Broadcasters homepage
    www.TCI.com Tele-Communications, Inc.'s homepage
    www.skyconnect.com Skyconnect's homepage
    www.GI.com General Instrument Corporation's homepage
    www.SciAtl.com Scientific-Atlanta's homepage
    www.pbs.org/insidepbs/dtv Public Broadcasting System digital television information
    www.SEC.gov U.S. Securities and Exchange Commission, with links to EDGAR filings




    The information in this report has been obtained from sources which we believe to be reliable, but we do not guarantee its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation by SmallCaps Online LLC for the purchase or sale of any securities. SmallCaps Online LLC has have performed investment banking, consulting or other services for or may solicit investment banking, consulting or other business from, any company mentioned in this report. SmallCaps Online LLC or persons associated with SmallCaps Online LLC may at anytime be long or short any of the securities referred to herein and may make purchases or sales thereof while this report is in circulation or posted on the SmallCaps Online LLC website at www.SmallCapsOnline.com. This material, or any portion thereof, may not be reproduced without prior permission from SmallCaps Online LLC. SmallCaps Online LLC is not responsible for the contents of this document which is intended for electronic transmission and could be thus subjected to tampering or alteration. Copyright © 1999 by SmallCaps Online LLC. All rights reserved.