<DAILY DOUBLE>
Thursday, March 18, 1999

ACTV, Inc.
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Phone: 212-217-1600
Website: www.actv.com
Price (3/17/99): $6 1/32

HOW DID IT DOUBLE?

What will the future of broadcasting technology bring? Will your recliner become a director's chair? Imagine watching the Los Angeles Lakers play and having the ability to call the shots, theatrically speaking. As Kobe Bryant hits from the perimeter, you can bring up the stats in-progress. Want to see what Shaq is doing? Cut to the Shaq Cam. Want the full court? Press.

After the game, how about a little MTV? Wouldn't the future of music videos be luxury rich if your set was hooked up to the Internet and the programming itself gave you the option to check out the song lyrics, fan club information, and maybe a band discography? Or, better yet, the ability to purchase the title from an online store?

Well, tomorrow is here and ACTV wants to be that future, today. While it has been two years since the company forged a relationship with FOX Sports to develop "Individualized Television" as a cable service add-on, the introduction of HyperTV now has investors tuning in to ACTV.

HyperTV, which allows a viewer to interact with television programming through Web links, has helped bring this perennial penny stock into prime time stock watching.

BUSINESS DESCRIPTION

ACTV utilizes proprietary software to enhance the television experience. Individualized Television uses the company's patented "four-plex" technology to enable a viewer with different programming options.

Like Individualized Television, HyperTV also uses a standard television set -- only this time with an Internet connection. HyperTV lets the viewer surf the Web through related hyperlinks provided by the programmer.

FINANCIAL FACTS

Income Statement
12-month sales: $1.2 million
12-month income: ($13.2 million)
12-month EPS: ($0.74)
Profit Margin: N/A
Market Cap: $141.1 million

Balance Sheet*
Cash: $7.1 million
Current Assets: $8.5 million
Current Liabilities: $2.0 million
Long-term Debt: $4.3 million
(*As of Sept. 30, 1998)

Ratios
Price-to-earnings: N/A
Price-to-sales: 117.6

HOW COULD YOU HAVE FOUND THIS DOUBLE?

When dabbling in unproven and unprofitable upstarts, taking that first leap of faith is often quite the doozy. Yet, when the company leaves a favorable impression on large, respected companies, it pays to take notice.

HyperTV has had limited commercial usage through its eSchool application. The solution is set up to teach educators how to use the Internet in the classroom. As unsure as eSchool may appear to be, school districts in major metropolitan areas like Philadelphia and New York City have signed up.

However, the real gem has been its relationship with publicly traded giants. Liberty Media <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: LMG.A)") else Response.Write("(NYSE: LMG.A)") end if %>, now part of AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %>, took a 10% stake in the company last year. Set-top box maker General Instruments <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: GIC)") else Response.Write("(NYSE: GIC)") end if %> is also an investor.

But those aren't the only notables teaming up with ACTV. In recent months, the company has also established alliances with other heavyweights like Sun Microsystems <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: SUNW)") else Response.Write("(Nasdaq: SUNW)") end if %> and Scientific Atlanta <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SFA)") else Response.Write("(NYSE: SFA)") end if %>. With General Instruments and Scientific Atlanta on board, ACTV now has both television set-top box suppliers ready to pave the way for ACTV-altered content as a premium add-on.

Yet, despite all these big-time associations, shares of ACTV were still trading for less than two bucks apiece as recently as November. With A-list believers having publicly endorsed ACTV, you could have followed suit with plenty of time to land this Double.

WHERE TO FROM HERE?

Deep pockets also come with grabbing hands. If and when ACTV-enabled content is available beyond trial markets, the company will only get a fraction of the premium paid by cable subscribers. However, for a microcap like ACTV, even a modest percentage of the take can be a windfall when the market is a country full of cable enthusiasts.

The bigger question is whether the concept of Individualized Television will pan out. With a strong base of sporting fanatics, it is hard to imagine ACTV failing in this regard. Watching a football game where the viewer dictates the perspective sounds like more than just a novelty. Will the legions of fantasy football players pass up the opportunity to keep a closer eye on their star quarterback? No, it seems a sports-obsessed world is ready for ACTV.

But what about HyperTV? That technology has fueled the stock's fire, but it's also the one that can just as quickly put it out. On the surface, it's not as easy to embrace. Does the prospect of watching X-Files with the ability to open up a small chat room to discuss the episode live with other viewers sound tantalizing or needless? The truth is out there.

However, the key to HyperTV isn't so much what's in it for you -- it's what's in it for the programmer. If you had immediate access to purchase the title electronically the minute Oprah Winfrey announces the Book of the Month, wouldn't it be a win-win situation? If the ability to buy something on a home shopping network or during a late-night infomercial were a click away, wouldn't that be a win-win situation as well?

HyperTV, in its most idealistic sense, can grow to shake up the world of electronic commerce as we know it. It's hard not to deny the technology's huge potential. However, absent more thorough proving grounds than a connected teacher's lounge in Philly, it is difficult to gauge how attractive the concept will be in practice. Will someone come up with a better mousetrap by the time HyperTV goes mainstream? Again, the truth is out there, and you're back in the director's seat.

--Rick Aristotle Munarriz
([email protected])