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Videoconferencing Stocks Surge Today

Yahoo! News, 9/17/01

PHILADELPHIA (Reuters) - Shares of video conferencing providers surged on Monday as investors bet corporate travel restrictions and Americans' concerns about flying may benefit the industry after last week's attacks, analysts said. Shares of Polycom Inc. (Nasdaq:PLCM - news) and ACT Teleconferencing Inc. (Nasdaq:ACTT - news) soared on the first day of trading after the Sept. 11 airplane attacks on the World Trade Center and Pentagon (news - web sites).

Polycom, which makes video communication equipment and software, jumped $6.31, or 33 percent, to $25.45 in heavy trading on Nasdaq. Polycom's merger partner, PictureTel Corp. (Nasdaq:PCTL - news) added 59 cents, or 12.9 percent, to $5.17. ACT Teleconferencing soared $2.35, or 47 percent, to $7.35, making it one of the biggest percentage gainers on Nasdaq.

The video conferencing sector was one of the few bright spots on Monday when the U.S. stock market resumed trading. The Dow Jones Industrials average fell 679 points, or 7.1 percent, to 8920.7, while the Nasdaq composite index shed 116.09 points, or 6.85 percent, to 1579.28.

“With increased security and limited flight availability, we expect business travel to drop precipitously. However, business must continue. Therefore, we expect to see a significant increase in demand for video conferencing equipment and services,” Pacific Growth Equities analyst Brian Alger said in a research report.

The attacks by four hijacked airplanes on Tuesday sparked a surge in demand for videoconferencing services as businesses and families tried to locate friends and loved ones, and emergency workers tried to coordinate rescue efforts. An unprecedented two-day ban on air travel also forced companies to find new ways to hold meetings or tend to clients.

“The tragedy itself, the failure of not being able to get from one place to another, being stranded out of contact, will probably have an impact on use of technology because travel is unpractical or scary,” Polycom Executive Vice President Jules Devgne said in an interview last week.

King of Prussia, Pennsylvania-based VSPAN, which typically handles about 3,500 corporate clients a day, said last week it saw a 30 percent to 40 percent increase in traffic after the attack. Privately held VSPAN expects the surging demand will require it to almost double its business in the near term.

“After the attack occurred, we saw a gigantic spike in demand with people needing to communicate, and set up emergency assurance,” said Ken Hayward, chief executive of VSPAN, which coordinates video, audio and Web-based conferencing services for business meetings, events and training.

Beyond market leaders Polycom and Picturetel, Alger said he expects any companies that provide services and equipment for business-class video conferencing will likely see a near-term boost from the downturn in business travel.

Wire One Technologies Inc. (Nasdaq:WONE - news), which resells Polycom and PictureTel equipment, rose 97 cents, or 22.7 percent, to $5.25. Distributors and dealers such as MCSi Inc. (Nasdaq:MCSI - news) and Tech Data Corp. (Nasdaq:TECD - news) may also see a benefit from an increase in demand, Alger said.

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