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IPO Update: Wink Communications jumps 123 percent

Wink Communications (Nasdaq: WINK) closed up 19 11/16, or 123 percent, to 35 11/16 Thursday in its initial public offering. The 4.75 million-share offering priced at $16 a share.

In a rocky IPO market where many companies are postponing offerings, Wink managed to price at the top of its range and increase the amount of shares being offered.

Wink's original price range was $14 to $16 and the company originally planned to offer 4.2 million shares. Donaldson, Lufkin & Jenrette is the lead underwriter.

Interactive TV: Is the future finally here?
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Wink, an interactive TV pioneer, allows electronic commerce to be conducted through cable TV boxes and remote control handsets.

Analysts said Wink's IPO could be hot based on the company it's keeping.

Powerful pals

DirectTV invested $15 million for a 4 percent stake last month and Microsoft invested $30 million for a 10 percent stake in June. Microsoft will use Wink's technology in future version of WebTV. Wink has also licensed its technology to CBS, NBC, ABC, CNN and a host of other cable channels.

Cable box makers Scientific Atlanta Inc. (NYSE: SFA) and General Instrument Corp. (NYSE: GIC) are investors in Wink.

``Interactive TV is one technology that is starting to come back up again. With this kind of interactivity, it makes lot of sense and offers another level to advertisers,'' said Bill Ablondi, of research firm MarketMaps. ``I think Wink will be successful. It will take time and development on the infrastructure side to make it happen."

Unproven concept

Because interactive TV hasn't caught on despite two decades of prototypes, Wink remains largely a concept stock.

The projections: Forrester Research reckons that enhanced broadcasts will generate $6.2 billion in advertising revenues and $3.8 billion in commerce by 2004.

The reality: Wink will be in less than 200,000 homes by the end of year in a crowded market that includes competitors such as Worldgate Communications (Nasdaq: WGAT), Source Media (Nadsaq: SRCM) and ACTV (Nasdaq: IATV). As of July 29, Wink's enhanced broadcasting services reached 40,000 homes.

ACTV, perhaps looking to ride shotgun with Wink's publicity, announced that it completed its first point-of-presence (POP) for HyperTV, which integrates Web content, advertising, e-commerce, and chat with television.

ACTV said it has partnerships with a number of key players, most notably The Box Music Network, an arm of MTV Networks that reaches 40 million homes globally. HyperTV will roll out on The Box this fall.

ACTV said it expects "to derive significant revenue from HyperTV" through various transaction, advertising and licensing fees.

Where's the sales?

But revenue is one area where Wink and ACTV lag. For 1998, Wink reported sales of $517,000 and a loss of $14 million. For the six months ending June 30, sales were $620,000 with a loss of $9.2 million. "Our ability to generate revenue is subject to substantial uncertainty," said the company in regulatory filings.

ACTV, which counts General Instrument and Liberty Media Group as investors, reported revenue of $453,713 for its second quarter ending June 30. ACTV also reported a loss of $5.6 million, or 14 cents a share.

The challenge for Wink and other players in the interactive TV space is clear: make couch potatoes interactive.

That may not be easy.

Viewers "may feel that responding to Wink-enhanced programming and advertising is too complex or interferes with viewing television," said Wink in its regulatory filings.

Reuters contributed to this report.