What's Hot, What's Not
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It's crunch time for tech stocks. As if you didn't know that already. Brokers are busy thumbing through rolodexes, delivering margin calls by the baker's dozen. Panic has started to set in, and the Net high-flyers just can't seem to catch a break.
Okay. I'll admit it. Yesterday, I went on a major Net stock shopping spree, and you should see some of the deals I got. First, I scooped up the CMGI of B2B, Internet Capital Group (ICGE), at 80 percent off its 52-week high. As many of you are aware, Safeguard Scientifics (SFE) abruptly announced its intentions to move out of B2B last week. For many investors, that signaled the closing act for the once promising flavor of the month. Nonsense.
FreeMarkets (FMKT) looked too tasty to pass up, 85 percent below its 52-week high. With a ridiculously narrow 3.6 million share float, get ready for blast-off. I also grabbed an extra helping of Linux and interactive TV, topped off with a nutritious dose of broadband equipment makers.
Last on my list were cheapo, bargain bin Internet companies that boast strong brands and a healthy war chest to see them through this latest market whiplash. Downside risk is ridiculously low, while cash on hand is enough to outlast a prolonged winter. Say what you will about nasty competition and an uncertain future, but I own 'em at six bucks a pop.
My best advice is to start picking through the ashes. Add beaten-down leaders, cash wealthy Nets that are moving toward profitability, and be sure to steer clear of plain vanilla e-tailers. The last time we experienced this much excitement was during the summer correction of 1998. It'll be some time before we see these deep discounts again. You can take that to the bank.
Well, enough about me. Let's take a peek at yesterday's M&A news and notables.
MP3.com (MPPP) announced plans to tango with Atlanta-based mp3radio.com. MP3.com will lasso a majority stake in the start-up from its sugar daddy, Cox Interactive Media. Terms of the deal were held close to the vest.
Mp3radio.com will take the full plunge, moving into MP3.com's San Diego digs and will bring to the table its 118 radio station affiliates. Shares of MP3.com slipped a buck and three quarters ahead of news of the deal before falling another dollar after-hours. It's been a bumpy ride for the once celebrated e-music newcomer. The stock is off 86% from its 52-week high, currently hovering precariously at $12.
However, despite the deflated stock price, this beaten-down stock still wouldn't find its way into my portfolio. Until the Recording Industry Association of America (RIAA) wraps up its MP3 witch hunt, this company doesn't boast much beyond a killer domain name.