Is Interactive Tv So Much Hype?

The latest buzzword on the Street is "interactive," and any stock involved in interactive television has been hot. Take Interactive Network, which has developed a proprietary system that enables viewer control over a TV system and allows direct interaction with certain televised shows, including sports and game shows.

Hitting a high of 15 in early January, Interactive's stock came under tremendous pressure in February when regulatory concerns started to haunt cable companies. By April, Interactive shares had plunged to around 4. Then on Apr. 27, the company announced that cable giant Tele-Communications had purchased a 15% stake for $10 million. That sent the stock flying, to 13, where it's currently trading.

The stock has become a new target for the shorts, who contend that the excitement over interactive TV is all hype. The shorts say so-called interactive-TV plays are way overvalued. So they have shorted some 10% of Interactive's 8.6 million shares outstanding.

No matter, says one bull on the stock, veteran Wall Streeter Ray Dirks, who insists that the shorts are way off base. Dirks believes Interactive will be in the black by 1994 and earn 31 a share. And Dirks is excited about 1995, when he figures the company will earn a huge $3.53 a share based on estimated revenues of $106.6 million and 300,000 subscribers. Last year, Interactive signed a joint venture in Japan with SEGA Enterprises, which has 14 million household subscribers. Interactive CEO David Lockton says Tele-Communication continues to buy shares in the open market. The two companies signed a stand-still pact barring Tele-Communications from owning more than 30% of Interactive stock.

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