It used to be that the word "Internet" was what it took to blast a stock into outer space, but this week it was "Linux" that sent shares of V-One Corp. rocketing like the World War II buzz bomb of that name.
After the Germantown computer security software maker announced a new version of its product that works with the Linux operating system, V-One stock shot from $2.25 a share Tuesday morning to $5.62 1/2 in early trading yesterday before it began falling back toward Earth.
The shares slipped to $4.18 3/4 at the close of yesterday's Nasdaq Stock Market session after the day traders and Internet chat-room speculators who had ridden the stock up decided it was time to bail out.
By the end of the day, the online buzz was that V-One looked like a classic "moonshot"--a stock that shoots skyward and then quickly crashes. "Run Lemmings Run," said one contributor to the V-One discussion group on Yahoo. "She is going down like the TITANIC!" posted another.
Whether V-One stock plummets in the days ahead or maintains altitude, the two days of trading show how the markets have been driven into hypermode by technology and communications.
Ordinarily fewer than 100,000 shares of V-One are traded daily, but volume hit a staggering 20.8 million shares on Tuesday and topped 10 million shares yesterday. The company has only about 10 million shares outstanding.
The Linux announcement flashed instantly onto the Yahoo and Silicon Investor Internet bulletin boards that carry trade-by-trade commentary on online stock frenzies. More than 750 new messages about V-One were posted on Yahoo between the time the Linux press release was issued and 5 p.m. yesterday.
The excitement was also fueled by several online investment newsletters, television business shows and even the Web's newest medium: Internet radio. An online audio service called RadioWallStreet (www.vcall.com) carried an interview yesterday with the only securities analyst who follows V-One stock, Barry Glasgow of a small Chicago firm, LaSalle Street Securities Inc.
Until about a month ago, V-One was also followed by analyst Paul Merenbloom of Prudential Securities Inc., but he dropped coverage after the company issued a quarterly financial report that fell short of even modest expectations. V-One's second quarter sales dropped to $1 million from $1.2 million a year earlier and it lost $2.2 million, compared with a loss of $2.7 million the previous year.
In the Internet radio interview yesterday, Glasgow predicted that a rapid turnaround could boost revenue to $21 million by next year and generate a profit of 18 cents to 22 cents a share. He said the stock could hit $8.50 a share.
The prediction drew a skeptical response on the Internet bulletin boards and did not reverse the stock's slide. Nor was the electronic crowd impressed by a V-One press release announcing that its software has been adopted for Citrix, MetaFrame and WinFrame computer systems.
What excited investors was the version for Linux, an operating system that has developed a near-cult following as the first serious competitor for Microsoft Windows. One of Linux's vendors, Red Hat Inc., has been the hottest software initial public offering in years. Red Hat went public Aug. 11 at $14 a share and its stock closed yesterday at $116.75 on the Nasdaq, up more than $30 in just the last two days.
Many investor bulletin board messages and some news reports referred to a "deal" between Red Hat and V-One, but no agreement between the two companies was mentioned in V-One's announcement.
Jim Reed, V-one's marketing director, said the company does not try to explain movements in its stock but "I would assume" the run-up was due to the Linux announcement.
Company officials said they issued the announcement of the Linux software in advance of an industry convention next week and were "totally surprised" by the stock market response.
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