Subject: IC940716: Superhighway Stocks

From: "Gray Zhu, 800-289-2498, 212-279-6700" <[email-masked]>
Date: Sat, 16 Jul 94 20:32:25 CDT

====================    IC940716: Investment Club  ======================

                        Information Superhighway
                        ========================

0. We need your contribution (no money) to this net ....... Gray Zhu
1. Introduction to information superhighway ............... Gray Zhu
2. A list of companies (with ticker) among the ones which are actively 
   participating .......................................... Some One
3. A hitchhiker's guide to the information superhighway ... CFO magazine
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 (the following is no recommendation to any of the companies mentioned)
_________________________________________________________________________
   (be sure to read the Disclaimer in the end if you have not read)

*************************************************************************
0. We need your contribution to this net.

This net has been existing for some time, and I have been one of the few
major contributors to this net so far. I am surprised by the fact that
you are still sticking with it, thanks for your corporation! But as a
salesman, I personally need more time to sell stocks and mutual funds to
pay my bills :-(. So, I hope you can contribute more to this net rather
than just listening - you are in danger of being brain washed :-), tell
us your investment ideas, experience, or whatever. -Gray
*************************************************************************

1. Introduction to information superhighway

The justice department has turned on the green light for AT&T's
acquisition of McCaw Cellular Communications, which owns the largest
wireless communication network Cellular-1. It is a victory for AT&T,
because this will better position AT&T in the competition of informatin
superhighway business. What is the superhighway?

The information superhighway is a high-capacity 2-way electronic pipeline
to the home - capable of simultaneously transmitting a huge number of
different television programs and other electronic services - with
telephone-like connectability between users and services and between
users and other users.  Its principal value will be to greatly expand
what can be done with television.  Digitization and digital compression
are the key elements that make it all possible.  The basic technology is
available, but the practical implementation of this technology is largely
in the experimental state, with many different concepts and variations
being tested and refined.

Multimedia meets the "Information Superhighway". The alchemy of these two
Wall Street metaphors is magic; it has fueled investor speculation that
three seemingly distinct industries: technology; telecommunications.

In reality, the "Information Superhighway" does not exist as a monolithic
interstate highway system.  There is no single Interstate 80 that
connects the digital equivalent of the New York George Washington Bridge
to San Francisco's Bay Bridge.  Instead, the "Information Superhighway"
is about many forms of high speed broadband network transport whether it
be land-based telephone, air-based wireless, modem-based PC's or
satellite transmissions. Simply put, the transport routes on the
"Information Highway" are boundless.

Any successful transportation system requires traffic. Without traffic
there are no toll revenues. Toll fees are needed to finance the ongoing
operation of the highway, whether its the $4.00 toll to cross the George
Washington Bridge or $1.00 for the Bay Bridge. Multimedia is fuel for the
Information Highway. Multimedia is about converting content into digital
data, regardless of whether this content is created from software,
entertainment or the publishing industry.

The market can be divided the market into three segments:

o Content Providers: largely software and entertainment/media industry;
o Transport Providers: principally telecommunications, cable and
   wireless industries; and
o The Enablers: cross-section of technology and telecommunications
   equipment industries.

**********************************************************************

2. A list of companies (with ticker) among the ones which are actively
   participating as Content Providers, Transport Providers or The 
   Enablers.

Company                        Ticker     Price 4/11/94
-------------------------------------------------------
3Com                           COMS              53 1/8
ADC Telecom                    ADCT              38 1/8
America Online                 AMER              58 3/4
Ameritech                      AIT               37 7/8
AT&T                           T                 50 1/8
Avid Technologies              AVID              27 1/4
Bell Atlantic                  BEL               51 1/2
Broderbund                     BROD              32 3/8
Brooktree                      BTRE               6 1/2
Cabletron Systems              CS                98 3/4
CBS                            CBS              289 1/2
CUC International              CU                30 3/8
Disney, Wait                   DIS               41 5/8
Dun & Bradstreet               DNB               56 7/8
Electronic Arts                ERTS              20 3/4
General Instrument             GIC               43 3/4
Intel Corporation              INTC              63 3/4
WPP Group                      WPPGY              3 1/2
Lotus Development              LOTS                  63
LSI Logic                      LSI                   18
MSF Communications             MFST              27 1/4
Micron Technologies            MU                83 5/8
Microsoft Corporation          MSFT              84 7/8
Motorola                       MOT               95 1/2
Oak Industries                 OAK               17 3/4
Oracle                         ORCL              29 3/4
Pacific Telesis                PAC               30 7/8
Proxima                        PRXM                   9
Ramtron                        RMTR                   4
S3                             SIIl              11 3/4
Scholastic                     SCHL              37 1/4
Sierra On-Line                 SIER              22 7/8
Sybase                         SYBS              43 1/2
Tele-Communications, Inc.      TCOMA             20 1/8
Tellabs                        TLAB              52 3/4
Texas Instruments              TXN               70 1/4
US West                        USW               40 1/2
Viacom                         VIAB              22 1/4
Weitek                         WWTK                   6
Zilog                          ZLOG              31 3/4

**********************************************************************

3. A hitchhiker's guide to the information superhighway
================================================================
CFO: The Magazine for Senior Financial Executives, May 1994

A hitchhiker's guide to the information superhighway
                 by Zygmont, Jeffrey

Consider the following propositions:

(a) The information superhighway is coming, and it will change the way   
companies do business.

(b) Every business that uses a telephone is already on the information
superhighway.

Both statements are true. The seeming contradiction stems from the popular
notion that the so-called information superhighway, like four lanes of
concrete, is a physical entity awaiting construction. Think of it instead
as an evolving concept that promotes an expanded role for
telecommunications.  Certain significant elements are already available;
many more are quickly emerging.

Right now, for example, anyone with a telephone and a modem can hook a
computer to the Internet and be in touch with thousands of computer
networks around the globe.  Companies of all sizes engage in
videoconferencing.  Advanced techniques for packaging and sending data are
already changing the way business is done. New vehicles for marketing and
delivering products are being developed.

What does this evolution portend for business? In the near term, companies
will be looking for applications that give them a competitive advantage.
"The leader is going to be the one that asks, 'How do I use this technology
to do my business?'" says Bill Wilson, vice president of strategic planning
for WilTel Inc., a Tulsa-based full-service telecommunications provider. In
the long run, says Wilson, "The basis of competition in a number of
industries is going to change."

"The biggest risk is in not participating," warns Timothy Price, president
of MCI Communications Corp.'s Business Markets operating group. "The
information superhighway won't have toll booths or troopers, but it will
have a passing lane."

ROAD BUILDING

Eventually, today's voice-only telephone system will be superseded by a
broadband, high-capacity data network that folds in components of cable TV,
cellular telephony, and other wireless systems. As with the phone system,
the illusion of a single network will be produced by many different
networks and facilities operating in a coordinated fashion. Users will be
able to plug in information appliances as easily as they plug a blender
into a wall socket.

Digital technology will make this transition possible. The vast majority of
telephone voice traffic still travels in the form of analog signals. In its
mature stage, the information superhighway will carry primarily digital
signals--voices and other data encoded by and for computers. Digital data
can be compressed, making more room on transmission lines and speeding the
transfer of such data-intensive products as video programs.

In some sectors, the analog-to-digital conversion is far advanced. Across
much of the country, phone companies are upgrading facilities so that
businesses can utilize integrated services digital networks (ISDNs).
According to Bellcore, the Livingston, New Jersey, research collaborative
of the seven Baby Bells, all seven plan to offer ISDN capability over at
least half their service areas by the end of this year. The more ambitious
among them, including Ameritech Corp., Bell Atlantic Corp., and Pacific
Telesis Group, are racing toward 80 to 90 percent coverage by the end of
1995.

Meanwhile, phone companies have already woven a lattice of high-capacity
fiber-optic cables over the United States. And they have installed much of
the digital switching computers necessary to effectively route
data-intensive transmissions. "On the interexchange carrier network, we're
already set up," says David Malfara, president and chief executive of Pace
Long Distance Service, in Greensburg, Pennsylvania.  The "last mile" of the
superhighway, the link to individuals, is being fought over by
local-exchange carriers, cable TV operators, and entertainment providers,
sparking a frenzy of mergers, acquisitions, and joint ventures. "The entity
that owns the information link to the user will hold a lot of power," says
Malfara.

Individuals will be connected to the superhighway via information
appliances designed to send and receive large chunks of data. Anticipating
an eventual merger of televisions, personal computers, and telephones,
computer makers are working on products that, they hope, will create vast
demand for such appliances. IBM Corp., for example, is conducting trials
with Bell Atlantic on making home cable TVs interactive by attaching a
special microprocessor.  Apple Computer is engaged in a similar trial of a
set-top box, while Compaq Computer Corp.  has entered into about 20
alliances to help it create multimedia appliances.

SEE IT NOW

The hottest vehicle on the superhighway is videoconferencing. Eight years
ago, video meetings had stimulated a mere $1 million worth of interest;
last year, businesses bought almost $500 million worth of videoconferencing
systems.  Conservative estimates have purchases exceeding $2 billion by
1997, as more companies employ video meetings to join workers in distant
offices, share visual information, even bring in customers from outlying
areas.

The popularity of videoconferencing surged when miniaturization--and
corresponding price reductions--arrived in earnest last year, largely
through desktop products that harness a personal computer to serve as
videophone.  PictureTel Corp.'s Live PCS 100, for example, combines a small
camera atop a monitor, video-and audioboards, and a speaker phone, plus
appropriate software. The cost of the basic system is $5,335, compared with
$13,000 to $47,000 for room-sized installations designed to handle large
audiences.

The chief justification for videoconferencing has been the spiraling costs
of business travel. But as the equipment becomes smaller and cheaper, new
applications are appearing in the service sector.

Huntington Bancshares Inc., in Columbus, Ohio, recently became the first
bank in the country to offer interactive video banking. Video machines at
sites in Columbus and Dayton enable customers to meet face-to-face with a
teller or loan officer at any hour. Such around-the-clock service has been
available over the telephone, notes bank spokesperson Cynthia Phillips, but
the video link gives customers "a greater level of confidence that the
transaction will be done correctly." Depending on customer reaction, says
Phillips, the bank could reconfigure up to 40 percent of its branches to
accommodate video banking.

Meanwhile, Kinko's Copy Centers, working with the long-distance company
Sprint Corp., will have installed videoconferencing services in about 150
of its print shops by year's end. Kinko's is betting that customers will be
willing to pay $150 an hour and up to connect with associates at any of
approximately 3,000 videoconference installations on the Sprint
international system.

The ability to view and manipulate the same data screens simultaneously has
spawned "data conferencing": two or more people working on the same
document at the same time, over phone lines. Co-workers using a PictureTel
PCS 100 system can share computer data on a special "whiteboard" that
appears on the computer screen beside the videophone image. Similarly, for
$2,499, Intel Corp.'s ProShare Video System 200 adds a live video window to
shared data screens on personal computers.

MAKE ROOM FOR DATA

Businesses usually pay dearly for extra transmission capacity, often in the
form of "T-1" lines--fat conduits stuffed with wires dedicated to specific
tasks.  Increasingly, however, transmission providers are offering "data
dial tone," which makes more bandwidth, or data capacity, available only
when needed.  Data dial tone is opening up the phone networks for a wider
spectrum of data transmission needs.  "It's something that's built into
everything we do," says Paul Weichselbaum, vice president of data marketing
for MCI.

Ryder System Inc., the Miami-based truck-leasing giant, is installing
equipment that by year-end 1995 will allow nearly 100 branches and regional
offices to use data dial tone and frame relay, an advanced high capacity
data-packaging method.  Using frame relay, two distant Ryder machines will
be able to effortlessly swap information such as billing, equipment
availability, and maintenance schedules.

A newer, faster data-packaging technology than frame relay is asynchronous
transfer mode (ATM), which gives businesses the potential to handle all
forms of data communication through the public networks. The data move at
extremely high speeds; ATM can push the equivalent of a 400-page book
coast-to-coast in one second.  With ATM, virtually every node on he
communications network becomes a potential communicator.  "ATM gives us the
opportunity to get our services out to a much wider market," says Bill
Grant, vice president of networking services for Minnesota Supercomputer
Center Inc., in Minneapolis, which provides high-speed number crunching for
such tasks as modeling DNA. The company can pull a computing problem from a
customer over long-distance lines, do the processing, and return the result
at speeds that, says Grant, will eventually "make it appear like our
supercomputers are right on a person's desk."

Data dial tone and data-packaging technologies promise to benefit any
widely dispersed enterprise that feeds on information.  For example,
automotive design centers around the world will be able to collaborate more
easily.  Or, an investment bank's subsidiary in, say, Buenos Aires will be
able to harness the computer facilities of the home office in New York.

THE INFORMATION MARKET

Just as ATM provides computer and software companies with a whole new
medium for distributing product, the information superhighway promises to
do the same for a wide spectrum of businesses.

For the consumer industries, it enables home shopping to become an
interactive experience.  In Bell Atlantic's Stargazer program, currently
being tested in northern Virginia, special-purpose computers equip
televisions with "video dial tone"--two-way communication of multimedia
signals, on demand, like a telephone. Stargazer allows shoppers to wander
through different departments, inspect a particular product, and place
orders.

"Every large company, in some form or fashion, will be a videoinformation
supplier to somebody," says Thomas G. Dalrymple Jr., director of video
applications for Bell Atlantic's Large Business Services. Even companies
that don't hawk consumer wares will use video, he says, perhaps to provide
customer training.

For companies with information to sell--virtually any visual, audio, or
knowledge product that can be rendered in digital code--expansion of the
superhighway will provide access to a market still in its infancy. On-line
services like Nexis/Lexis, Prodigy, and others stand to become more
widespread as expanding telecommunications capabilities make browsing
easier and provide more nodes capable of receiving information.

THE WIRELESS CONNECTION

No discussion about the information superhighway would be complete without
at least a nod to wireless communication.  The popularity of cellular
phones, along with new satellite systems, assures them a role as
transmission media connecting individuals to the wide-area network. One
market leader, Motorola Inc., expects wireless services to account for $600
billion, or 20 percent, of the $3 trillion global telecommunications market
that is expected to develop by 2010.

"Our business customers have an almost insatiable demand for mobility
services," says John Losier, president of Large Business Services for Bell
Atlantic. He expects cellular phones to move in as office equipment as soon
as microcellular technology takes hold. By fragmenting regions into smaller
cells, microcellular technology increases the capacity of a cell-phone
network.

Technologies to turn cellular systems into digital data handlers are in
development.  The two hottest, code division multiple access and time
division multiple access, promise to increase the capacity of cellular air
space up to 15 times.  Cautions Ann Lynch, a market analyst for BIS
Strategic Decisions, in Norwell, Massachusetts, "It's going to take a while
until digital cellular is up and running everywhere in the country."
Meanwhile, programs to launch satellite communication networks are gaining
momentum. One of the most advanced, Motorola-backed Iridium, seeks to bring
phone service to remote regions and even compete with wired services.

Just  as it propels the emergence of the information superhighway at large,
the  convergence  of  transmission  technology  and low-cost computer power
underlies  the expansion of wireless services. The connection shows clearly
in  the halting progress of personal digital assistants (PDAs). Largely the
province  of  computer  makers,  these new-breed devices emerged in 1992 as
electronic  memo  books  that  could send messages. The first round of PDAs
suffered  disappointing sales, though; industry analysts say that many just
don't  communicate  easily  enough.  Apple Computer's Newton, for instance,
requires expensive modem and pager attachments.

Thus, PDAs are going back to the drawing board. Eo, a venture largely
underwritten by AT&T Co., is expected to replace its tablet-style "personal
communicator" with a smaller, flip-up-style phone that includes a small
computer.  Motorola is preparing its own personal wireless communicator,
which will emphasize communications over computing.

THE PACESETTERS

Although enthusiasm for the superhighway is running high in government and
academia, Corporate America is generally taking a wait-and-see approach.
"Most of what happens will be slowly integrated into the transaction of
business over years," concedes Pace's Malfara.

The inertia of business-as-usual may be the greatest hurdle to adopting the
new capabilities in telecommunications. But superhighway advocates remain
confident that traditions will fall as more pioneers demonstrate that
profits await.

They look for leaders to come out of financial services, where "information
is money, and that's very well understood," says Wilson of WilTel. They
expect leaders to emerge among manufacturers, especially automakers and
aerospace companies, where rapid product development is a must, and where
dispersed engineering and production resources must work cooperatively on
complex, information-intensive products.

Health care is also cited as a leader, as diagnostic talent begins to
spread via video-and data-conferencing.

Even the fashion industry, which must respond quickly to market shifts, may
have a prime role in fostering the superhighway, says Wilson. "Buyers in
New York, designers in Europe, and manufacturers in Asia could examine
fabrics and designs as if they were together in the same room," he says.
"Once you know what's working in the marketplace, if you could shave two
months off the delivery process, the profits would be enormous."

Jeffrey Zygmont writes on business and advanced technology from Salem, New
Hampshire.

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