Acacia Technologies Group (ACTG) could be a big beneficiary of the popularity of video-on-demand (VOD) -- movies provided for a fee by hotels and on cable TV. So says Paul Sethi of Vertical Ventures Investments, who thinks the shares, which vaulted from 1.18 on Mar. 18 to 5.51 on Sept. 24, could double in a year. Acacia has signed 41 licensing pacts for its patented Digital Media Technology, which enables transmission of VOD. It has inked deals with LodgeNet , the leader in hotel VOD, and CinemaNow, the Internet biggie. It also has deals with several adult Web sites. But the big gains will come from cable-TV giants, such as Time Warner. CEO Paul Ryan says that with Acacia's 22 worldwide patents, he expects media and cable moguls to seek licensing. On-demand movies, according to Forrester Research, will account for 40% of cable-TV viewing by 2006. Sethi says Acacia has cash of $35.8 million, or $1.82 a share, but will post a loss in 2003. In 2004, he figures it could earn 25 cents a share on sales of $35 million. Several hedge-fund managers, who declined to be named, continue to buy shares.
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
Corrections and Clarifications
In "Sweet licensing deals for Acacia" (Inside Wall Street, Oct. 6), Paul Sethi's estimates should have read: "By the end of 2004, he figures Acacia could post quarterly earnings of 25 cents a share on run-rate sales of $35 million," instead of: "In 2004, he figures it could earn 25 cents a share on sales of $35 million."
By Gene G. Marcial