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Vtel Has Lots Of People Talking


Inside Wall Street

VTEL HAS LOTS OF PEOPLE TALKING

For investors, videoconferencing is no longer the hot stuff it once was. But no matter. VTEL (VTEL) is hot even so. Stock of this designer and maker of multimedia videoconferencing systems hit 25 in September, before getting hammered in October along with the other technology issues. But lately, VTEL has been on the rebound and is now at 21.

VTEL sells at a price-earnings ratio of 45, but "in its group, VTEL is the classy act that's still cheap," says Robin Kerr, a money manager at Axe-Houghton Associates in Rye Brook, N.Y. More important, VTEL is attractive buyout bait. Kerr upped her holding in October, when the stock slumped to 17.

Kerr says she wouldn't be surprised if the likes of IBM or Intel, which already owns over 10% of VTEL, made a play for a large chunk, if not all, of VTEL. She also suspects Japanese giants might be interested. Even without a buyout, she thinks the stock is worth 35.

VTEL, whose systems integrate videoconferencing with other functions, dominates the corporate videoconferencing market. Intel is also in the field but focuses on desktop applications. VTEL is a major provider of systems to hospitals, government, and schools, where Intel lacks a strong presence. "The fit between VTEL and Intel would work well, considering Intel's broader objectives," says Kerr. VTEL didn't return calls.BY GENE G. MARCIAL


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