Tech-Stock Free Fall Hits Some Locals

4/09/2000 8:00 PM Eastern

Cable-technology stocks took a beating last week as investors feared the worst from the U.S. Department of Justice's antitrust decision concerning Microsoft Corp., sending over-the-counter stocks into a 350-point tailspin last Monday.

Though the government released its guilty decision after the market closed, investors saw the handwriting on the wall and dumped their high-tech shares in record numbers.

Monday's drop came on top of a 392-point free fall the National Association of Securities Dealers Automated Quotation System endured the week before, as investors exited tech stocks in droves and pumped their money into blue-chip issues.

Several cable-technology companies, including high-flying Terayon Communication Systems Inc., saw their shares plummet 30 percent or more April 3. Terayon-which had enjoyed a wild ride during the past four months, rising from $64 per share in December to $246 in March-fell $39.44 April 3 to $165.56.

Other stocks that took hits included Harmonic Inc. (down 30 percent to $72.31), CSG Systems International Inc. (down 32 percent to $50.43) and Corp. (down 28 percent to $38.75).

The Microsoft ruling and the NASDAQ plunge also hurt interactive-television stocks, especially OpenTV Inc. and Wink Communications Inc.

OpenTV dropped about 30 percent April 3, closing at $82.06. Shares in the middleware vendor have fallen steadily since they hit $226 on March 16.

After closing at $33.38 March 31, Wink shares had dropped nearly 25 percent by last Tuesday morning. Wink shares have fallen steadily since reaching the $70 mark in mid-February.

ACTV Inc. also took a hit, dropping from $35.06 March 31 to $29 April 3.

Shares in WorldGate Communications Inc. dropped from $30.06 March 31 to $27.81 last Monday. WorldGate stock has dipped since it traded in the low $40s in early February, then jumped up to $47.38 March 27.

Source Media Inc. stock dropped 50 cents on the Microsoft ruling, closing at $13.25 April 3.

But while tech stocks got hammered, NASDAQ-listed MSOs escaped the Microsoft-inspired sell-off relatively unscathed.

"These stocks have already been hit," SG Cowen Securities Corp. analyst Gary Farber said. "They're down on average about 30 percent before any of this happened. But despite people's concerns about [competition with] satellite, the guidance is that first-quarter results are in line, and there may be some upside because of the rollouts of digital and new services."

Several cable MSOs traded on the New York Stock Exchange also reaped some rewards, with Cablevision Systems Corp. rising $1.88 each to close at $62.63; AT & T Corp. up $1.69 to $58; and MediaOne Group Inc. up $1.13 to $82.13.

It seems that cable investors are beginning to get the cable story and are proving it with their pocketbooks, as is evident by the number of MSOs that saw their stocks rise while their NASDAQ brethren were going in the tank.

Farber believes cable stocks could see another boom time as a result. "This is an interesting time for cable stocks," he said. "A lot have hit their support levels, and we're not seeing anything disappointing coming out of companies. They recognize that competition is an issue. We could have some rallies."

Cable MSOs made out the best, with some-like Adelphia Communications Corp. and Comcast Corp.-even posting gains. Adelphia rose 4 percent between March 27 and April 3, and Comcast went up by 11 percent during the same period.

"Adelphia had a great quarter. The question was: Would anybody notice?" Farber said. "It could take a little while to get back more of those gains."

Still, Farber added, compared with Internet stocks, which were hammered in the NASDAQ sell-off, cable stocks are relatively stable. "When [cable stocks] had the aura of tech stocks, they were pretty safe bets," he said.

The reason for this is the fact that cable companies are beginning to show that they are living up to their promises by aggressively rolling out digital cable and new services.

Even the MSO stocks that were down weren't down by much. Charter Communications Inc. fell 60 cents per share to $14.31 March 29, a 4 percent decrease. Insight Communications Co. Inc. had the largest drop, 7 percent, from $22 per share to $20.63. And Mediacom Communications Corp. fell 7 percent to $13.94 from $14.88 March 29.

Steve Donohue contributed to this story.

Some Winners.

Company 3/27 4/3 %Gain (Loss)

Comcast Corp.




Adelphia Communications Corp.




Cablevision Systems Corp.




And Losers.

OpenTV Inc.




CSG Systems International Inc.




Terayon Communication Systems




Harmonic Inc.







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