Cybercash Inc.'s Internet payment technology continues to struggle for acceptance, but analysts are saying the company's long-term prospects are looking better all the time.
The Reston, Va., company, which has yet to make a profit, recently got a $15 million capital infusion from Philadelphia-based Rose Glenn Capital. Cybercash will gain access to another $15 million later in the year if certain performance goals are met.
Cybercash's most recent quarterly loss, $5.3 million, was better than analysts expected. The stock, which was trading at $13.25 Friday, has become attractive to investors and analysts willing to take a long view.
"Cybercash has the challenge of getting people converted to a whole new way of doing things, and that's very expensive," said Scott Smith, principal analyst at Current Analysis Inc., Sterling, Va.
"You have to create the market basically through marketing and through evangelism," he said.
Cybercash's stock has fallen a long way since the initial public offering two years ago. In April 1996 the price was in the low $60s, benefiting from the wave of interest in Internet-related issues. It suffered in the ensuing backlash as profits failed to materialize.
Cybercash has been able to weather the storm in part because it offers services and products based on several kinds of payment mechanisms, including credit cards, which seem to be people's first choice for Internet commerce.
Capital infusions help too. The most recent $15 million-the second investment in the last year-is slated for "strategic investments and acquisitions" rather than continuing operations, said James Condon, chief financial officer at Cybercash.
Though no deal is pending, "if we get into the course of a major acquisition, we want to know that we have enough cash in our pockets," Mr. Condon said.
On the basis of Cybercash's most recent financial results, Prudential Securities upgraded the stock from "hold" to "buy" last week.
For the fourth quarter Cybercash's net loss was 49 cents a share. For the year the company lost $2.42 cents a share, or $26.2 million. The year's revenues were $4.5 million, way up from $127,000.
Gary Craft, analyst at BancAmerica Robertson Stephens in San Francisco, said he expects the company will break even in the fourth quarter of 1998 and turn a profit in 1999.
Cybercash's foray into on-line bill payment could help it meet those expectations. Though the field is intensely competitive and crowded with deep-pocketed competitors, on-line bill payment has become one of Internet commerce's hot buttons.
Cybercash favors a "biller direct" approach, in which payees post bills on their own Web sites. This contrasts to the "concentrator" or "utility" models used by prominent competitors like MSFDC, the joint venture of Microsoft Corp. and First Data Corp.
Competing for a slice of the electronic billing pie "is a tricky proposition, considering how much the billers and banks want to exploit that channel and maintain their direct relationships," said Mr. Smith.
