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E-Mailbag Monday: XML, Agency.com, Electronic Arts

Tom's readers e-mailed him over the weekend with queries about XML, Agency.com and Electronic Arts.

What is XML? I keep hearing about it.

Reply: XML stands for extensible mark-up language. Basically, HTML (Hypertext mark-up language) was not versatile enough to handle the demands of e-business transactions. For example, suppose you wanted to add a new command in HTML. Well, you couldn't. But with XML, you can. This flexibility has been very enticing for developers for business-to-business applications. Thus, with XML there is data interchange. That is, companies can exchange data with each other, even though each has different data formats and systems.

Next year, it appears that business-to-business will remain high-growth and a boon for investors. So, we will definitely hear much more about the power of XML. It is becoming the standard language for business to business.

Agency.com: IPO of the Week?

Agency.com is planned to do its IPO this week. Will this one be a good one?

Reply: Like last week, this week is also expected to be slow for the IPO market. Only nine IPOs are planned. Although, you are right that Agency.com looks strong. In fact, it may be the biggest performer for the week.

Agency.com is a Web consulting firm. And, so far this year, such firms have done extremely well, such as Scient (SCNT) and Razorfish (RAZF).

Agency.com generated $74.8 million in revenues for the first nine months of 1999, compared to $55.9 million in the same period last year. Although, the company is losing money: $16.7 million this year, compared to $14.1 million last year.

But the company has an impressive list of over 200 clients, including Gucci, Compaq and British Airways.

The lead underwriter is Goldman Sachs and the proposed ticker symbol is ACOM. The price range is $10-$12.

Electronic Arts: Getting Internet Religion

What do you think of the AOL deal with Electronic Arts?

Reply: This was definitely a big win for Electronic Arts (ERTS). In the deal, Electronic Arts will create online games for AOL on an exclusive basis. This will be done through Electronic Arts online division EA.com. However, the fact remains that EA is still a traditional video game developer. It will take time for it to make the transition to the Net. Besides, the company already has a lofty valuation ($7.3 billion).

Rather, the better way to play this is through EA.com, which the board has approved to spin-off as a tracking stock. AOL will be an investor.



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