E-Mailbag Monday: VerticalNet, Turnstone Systems, book recommendations
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You recommended VerticalNet last year. With the new Microsoft deal, is the company still a good buy? Or is it overvalued?
Reply: I still think there is much more potential with this stock. Announced last Friday, Microsoft agreed to invest $100 million into VerticalNet (VERT) . Also important was that VerticalNet and Microsoft would provide business-to-business services to small and medium size businesses -- and, of course, Microsoft has extensive access to this market.
I see the Microsoft deal as validation of the company's leadership. I would not be surprised to see other major companies team-up with VerticalNet and thus propelling the company further.
My earlier article is VerticalNet: B2B First Mover (1/5/0).
What looks good in the IPO market for next week?
Reply: There are 19 companies planned to go public next week. Perhaps the strongest contender is Turnstone Systems. Local exchange carriers need to stay competitive and offer more and more useful services. Of course, providing high-speed Net access is critical. This is done using DSL (digital subscriber line). Unfortunately, it is complex and time-consuming to install. Well, Turnstone has a turn-key solution with its CX100 product line.
Even though the company launched its product in the first quarter of 1999, the revenues are an amazing $27.2. What's more, losses are minimal: only $183,000. Customers include Rhythms Net Connections, Covad Communications, Lucent and Network Access Solutions.
The lead underwriter is Goldman Sachs and the price range is $15-$17. The proposed ticker symbol is TSTN.
Going by the Book
I'm just starting to invest. What is the top book you would recommend?
Reply: As you know, there is a glut of investment books. You can learn about virtually anything: IPOs, biotech, derivatives, day trading, and even astrology (and how it relates to predicting hot stocks). However, if I were stranded on a desert island and could choose only book, it would be One Up on Wall Street: How to Use What You Already Know to Make Money in the Market. The book was written in 1990, but it is a timeless work. The author of the book, Peter Lynch, is a legendary investor, who helped build Fidelity into a financial powerhouse.