On heavy volume of 737,900 shares, CyberCash's stock closed at 18-1/4, off 5 from its close yesterday. The closing price was its lowest since it came public February 1996 at 17 a share; the stock has traded as high as 64-3/4, but has fallen steadily since last June. The company operates at a significant loss.
"The success of CyberCash is dependent on the build-out of the Internet as a commercial marketplace," wrote H&Q's Steven Birer, whose firm brought CyberCash public last year. He said the Net has not gone commercial as quickly as expected. "CyberCash is approximately 12 months behind where our initial model anticipated that they would be by this point."
Birer said he did not expect CyberCash to reach his earlier-projected mark of $25 million in revenues this year, but he did not offer a revised estimate. He projects 1996 revenue of $132,000, and cut H&Q's rating from "buy" to "hold," saying he thinks CyberCash's long-term prospects remain bright.
Bruce Wilson, a co-founder and CyberCash executive vice president, put a positive spin on the H&Q report. "It was a flattering continued recommendation from H&Q about the good job we had done, the competitive position we had secured, and our long-term prospects. What [Birer] is doing is adjusting his own estimates of the growth rate of Internet commerce in the first half of 1997."
In the quarter ending September 30, CyberCash lost $7.7 million, or 72 cents a share. Wall Street's estimate for the quarter ending December 31 is a loss of 80 cents a share, or $8.5 million, according to First Call.
CyberCash markets "wallet" software for consumers to make payments over the Net by credit card or other means. Its "CyberCoin" product is a form of electronic cash for purchases under $10, and it expects to offer electronic checks later this year. CyberCash also markets software for merchants and banks to handle Internet payments.
CyberCash collects a percentage of each transaction for itself.
CyberCash also processes credit card payments for Internet merchants and has been hurt by delays in finalizing a protocol called Secure Electronic Payments [SET], a standard to safeguard Internet bank card payments that Visa and MasterCard expect to complete by June. SET is going into pilot trials this month in Europe.