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Liberate's set-top deals send stock flying

Shares of Liberate Technologies, a provider of software for interactive television services, shoots up more than 50 percent on news that its software is being deployed in the United Kingdom.

Shares of Liberate Technologies, a provider of software for interactive television services, shot up more than 50 percent today on news that its software is being deployed in the United Kingdom.

Liberate said that Cable & Wireless, a U.K.-based provider of communications services, has turned the switch on new two-way interactive television services such as email and online shopping for consumers.

The company's stock soared 40.12, up 51.11 percent, to close at 118.62. Since Liberate's first day of trading in August, when it traded in the 20's, the stock is up about 420 percent.

Besides being a validation of the potential for TV set-tops, Liberate's staggering climb can also be viewed as a partial vindication for Oracle and its chief executive Larry Ellison. Formerly known as Network Computing Incorporated, the company initially existed as a subsidiary of Oracle to promote Ellison's vision of network computers supplanting PCs in the corporate environment.

That concept did not catch on, despite significant amounts of money and energy, and NCI was repositioned as a consumer company focused on software. Former Sybase CEO and Oracle competitor Mitchell Kertzman came in as CEO a year ago. As yet, Liberate has not had a profitable quarter since its inception in 1996, although it recently scored some wins with AOL, US West, and others.

"I think that the news probably doesn't warrant a [near] doubling of the stock price, although it is an important announcement, and it validates that the company is one of the leaders in this space," said Kevin Hause, an analyst with International Data Corporation.

Among the content partners that are Tune in to CNET News.com TV's IPO Forecast providing interactive services with Liberate are Barclay's, British Airways, Cartoon Network, and Bloomberg, Liberate said. Another, Two Way TV, said it is developing applications that would let users play along with TV game shows and sports programs. Its game service will be available later in 2000.

"It's a very hot market for interactive TV and digital TV. They've got interactive deployments over cable, satellite, and even terrestrial networks," Hause said.

The United Kingdom is way ahead of the United States at this point, but that will start to change next year as Echostar upgrades thousands of set-tops with software from OpenTV, and DirecTV starts offering its AOL TV interactive service.

"The issue [in the interactive television arena] has been that we have all these design wins and support from cable companies like Cox, but when will we roll out service," people have asked, said Mitchell Kertzman, president and CEO of Liberate. "This is the milestone," he said.

The service already has 46,000 customers, Liberate said. Investors have obviously been pleased by the news, which means that the company will begin to see annuity revenue streams from its customers, a more steady source of income than the engineering services revenue it has mostly depended on in the past.