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Net Stock Picks for the Millennium: Part II

Yesterday, I wrote my column on the top 10 stocks for the millennium. This is the final installment.

Healtheon (HLTH): The US spends a whopping $1 trillion on healthcare. And there seems to be no end in sight. Interestingly enough, 20 to 30 percent of the expenditures are wasteful. Healtheon has a solution and, of course, it involves the Net. True, there are a plethora of online healthcare sites. But so far, Healtheon has the leadership position especially with the merger with WebMD. The stock was as high as $126. Now, it is selling for $40. Healtheon is not shy. Basically, the company wants to be the end-to-end solution for online healthcare for consumers and physicians. In a show of validation, News Corp. invested a cool $1 billion in Healtheon. In the deal, Healtheon will have access to the global media empire of News Corp, which covers cable, print, and broadcast. Freemarkets (FMKT): This is a recent IPO and the valuation is quite high ($9.9 billion). However, the company has a key technology that is driving the B2B industry. Basically, FreeMarkets develops so-called dynamic pricing platforms. That is, buyers and sellers can bid on complex product offerings (which is the case with the B2B space). The result has been large cost savings. Happy customers include Pepsico, Owens Corning and General Motors.

In the IPO, the company raised $173 million, which should be helpful in growing its business. In fact, it was Goldman Sachs and Morgan Stanley that took the company public, indicating that they see tremendous potential. Actually, in 1998 the company showed profits.

Stamps.com (STMP): I hate waiting in line to buy stamps and Im sure many others feel the same. With Stamps.com, postage is a matter of going to the Web.

The company has the first mover in the industry and has aggressively signed key distribution deals. Partners include: IBM, 3M, Office Depot, Microsoft, Quicken, Lotus, ZDNet, and AOL. In fact, the AOL deal is exclusive and also invested in Stamps.com.

The company has also been making smart acquisitions. A recent one was for iShip.com, which helps customers comparison-shop for UPS, FedEX and other carriers.

In other words, Stamps.com is intends on being more than just stamps. It is positioning itself as the hub for delivery.

Priceline.com (PCLN): Early on, Priceline.com understood the importance of developing business models that can be patented. After all, the Net is intensively competitive. As recent court rulings have shown, Net patents do have substance.

A key patent for Priceline.com is Patent 5,794,207. In fact, the company is currently suing Microsoft over the patent.

The patent covers the so-called 'name your price' model. It has become a very popular method of transactions on the Web. Interestingly enough, the model can scale horizontally - which Priceline.com has been doing aggressively. For example, Priceline.com has applied the model to groceries, long-distance calls, car buying, etc. Expect many more deals.

Yahoo! (YHOO): This one speaks for itself. It is the premier Net company and should be a core holding for any Net investor.



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