UUNET feels heat of Internet access market

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In what could be the first bruise to an old-school Internet-access company since AT&T and MCI announced competitive low-cost consumer Internet access services, UUNET Technologies, Fairfax, Vir., announced Thursday it would withdraw its registration for a public offering because its stocks had fallen sharply over the past seven weeks.

The offering, announced Feb. 7, coincided first with consumer Internet-access only products from CompuServe, which introduced SpryNet with select market TV spots from Elgin Syferd/ DDB Needham; Prodigy launched prodigy.net as a business/consumer access-only product now in New York market trials.

Then the big guys joined the party. On February 27, AT&T unveiled its WorldNet pricing scheme which offers 5 free hours of access per month for the first year to AT&T customers. A couple days later MCI launched its own access deal, matching that of AT&T's.

UUNET began the public offering with shares at $40.75 and saw them fall to $32 on the day AT&T announced its WorldNet plans on Feb. 27. During March, shares hovered around the $28 mark. At Thursday's closing, shares were valued at $24.50.

So what does this mean for UUNET, a company that competes primarily with AT&T and MCI on business Internet-access products? In a statement issued by the company, UUNET President-CEO John Sidgmore says, "We believe that the market for Internet-related stocks has been affected by several recent industry announcements, especially AT&T's consumer Internet offering. We have not been able to communicate our message to the market effectively since we were in the quiet period associated with the registration process."

"You'll see us be rather assertive in the short term," said Paula L. Jagemann, UUNET's manager-investor relations. While UUNET is currently running print ads in business titles including Forbes and Fortune, it had been unable to launch new creative during the quiet period. Beginning as soon as April 15, UUNET TV spots from Donino & Partners, Atlanta, will launch in major markets.

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