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CyberCash stock takes a hit

The company's stock drops more than 13 percent in trading after news that it will post lower-than-expected revenue.

Tech Industry
CyberCash stock dropped more than 14 percent in trading today, one day after announcing it would post lower-than-expected revenue for the second quarter ending today.

The stock closed the day at 12.1875, down 2.0625. It has traded as low as 10.125 and as high as 27.75 during the past 52 weeks.

CyberCash said yesterday that it has cut its staff by nearly 20 percent--to less than 200 employees--and that its second-quarter revenues will be affected by order delays.

The company said it will post revenue of between $2.2 million and $2.5 million for the second quarter ending June 30, compared with $1.1 million posted for the first quarter of 1998, and $812,000 for the second quarter last year.

CyberCash was expected to post revenues of $5 million, including the company's March acquisition of ICVerify, compared with its combined revised revenue expectations of $2.7 million, said Genni Combes, an analyst with Hambrecht & Quist.

ICVerify sells PC-based payment software primarily to mail- and phone-order merchants. The $57 million merger was designed to create a single company that could take care of a merchant's needs both on the Net and on Main Street. But CyberCash has found it hard to make headway against payment rival VeriFone, now a unit of Hewlett Packard.

"Revenues for the second quarter were affected by some uncertainty in the market caused by the announcement of the ICVerify acquisition," CyberCash said in a statement. "Some customers of both companies delayed making purchase decisions while they assessed the impact of the acquisition."

CyberCash, which completed its buyout of ICVerify during the second quarter, called the impact "temporary."

But Combes said its too early to tell if any revenue increases to come from the ICVerify acquisition will be sustainable.

"Even though [the company's revenues are] picking up a bit now, it will throw off their timing a bit," she said. "I think my revenue assumptions and earnings projections will come down significantly, even though their operating expenses will be down from their layoffs," Combes said.

E-commerce analyst Scott Smith of Current Analysis said he thinks the end is near for CyberCash as a standalone company.

"The question is, when will it be bought or taken apart," Smith said, noting that the company's efforts in online billing haven't caught on yet.

CyberCash was one of the first Internet companies to go public, but it has suffered as e-commerce and Internet payments have rolled out more slowly than expected. The company offers a variety of payment types, including credit and debit cards, electronic checks, and electronic cash. It works primarily with online merchants.

CyberCash said that for the rest of the year it will focus on a "limited set of efforts."

In a separate announcement today, CyberCash said that its board of directors had adopted a stockholder rights plan in which preferred stock purchase rights have been granted as a dividend at the rate of one right for each share of common stock held of record as of the close of business today.

Tim Clark contributed to this report.

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