Liberate surges as loss widens, splits stock

For the quarter ending Nov. 30, Liberate reported a loss of $12.5 million, or 30 cents a share, compared with a loss of $7.3 million, or 26 cents, for the same period last year.

Wall Street analysts expected the company to lose 31 cents per share, according to First Call.

Revenues for the quarter reached $6.1 million, up 38 percent from $4.4 million last year.

Although the company is losing money, investors have become bullish on Liberate's stock, which has risen more than 1,100 percent since it began trading in late July. The shares gained 36.50 today to close at 252.50, a 17 percent spike.

In reaction to the lofty price, Liberate's board of directors has approved a 2-for-1 stock split that will apply to stockholders of record as of Dec. 31. The split is expected to take place around Jan. 18.

Liberate's software is used to provide email, Web browsing and e-commerce capabilities via a TV set-top receiver.

As of today, Liberate's market capitalization stands at $10.5 billion. That places it's value well above that of investor Comcast, which has a market capitalization of $3 billion and annual revenues of about $5 billion. By comparison, Sybase, a database software provider that Liberate president and CEO Mitchell Kertzman used to head, is valued at $1.3 billion on $867 million in annual revenue for 1998.

Liberate, whose stock was trading in the 20s just this past August, has seen its share price rise rapidly on news of deals to supply software to new partners as well as expanded deals with existing companies. The latter are more important to earnings, as the majority of Liberate's income will eventually come from royalties on products shipped, whereas currently most of the money is made from services such as consulting and engineering.

"These quarterly results reflect the heightened demand for our platform," Kertzman said in a statement. "With new deployments in Europe and the U.S., as well as strategic design wins in Asia and around the world, Liberate continues to define the interactive television market."

More recently, at last week's Western Show, a Comdex of sorts for the cable industry, Liberate said that its software would be available on cable set-tops from General Instrument, the nation's largest cable equipment maker. The two companies have agreed to jointly market Liberate's software for interactive TV.

Liberate also said it would work with Excite@Home for the development of interactive TV services and products. The deals represent more pieces of a puzzle that Liberate needs to put together so that cable operators can begin offering interactive services such as email, electronic program guides, ecommerce services such as online shopping and video-on-demand.

Liberate is the renamed former NCI subsidiary of Oracle. The company's original vision was to create a market for "information appliances" aimed for corporate use that didn't have hard disc drives, relying instead on network storage.

After being hotly debated in computer industry circles in 1996 and 1997, the network computing concept failed to gain a market foothold, in part because PC prices suddenly fell to historic lows--forcing Liberate to change its strategy and focus on the market for consumer devices such as set-top boxes. Since then, Liberate has secured investments from a number of cable operators such as Comcast, Cox Communications, MediaOne, Rogers Communications and Shaw Communications.

Perhaps emboldened by the success of his first spinoff, Oracle chief executive Larry Ellison has decided to revive the NCI name as well as the original mission for the company: making a corporate market for network computers.