E-Mailbag Monday: Chello, Market Conditions, SOAP
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With the huge performance in NASDAQ last week, is this the return of the market? Or will things tank again?
Reply: There's an old saying on Wall Street - "Don't Fight the Fed." With the Fed increasing interest rates aggressively, this advice has been validated once again.
But as of last week, there are signs the Fed is having an impact, especially with the release of the unemployement report. However, economic indicators can be quite volatile. While I think the Fed has done its task, the markets will likely be volatile for some time, until we have several more quarters of evidence that the interest rate actions are working.
But as this week has shown, it is not a good idea to avoid the stock market. Equity prices can surge in a short period of time - and you can miss lots of upside.
What looks hot for the IPO market?
Reply: This week should be slow. Although there is one IPO that is expected to do well. It is called Chello Broadband. The lead underwriter is Goldman Sachs. The price range is $11.88-$15.53 and the proposed ticker symbol is CHLO.
This company is a play on the broadband markets outside the US. Currently, Chello has operations in Europe, Latin America and Australia (the company is headquartered in Amsterdam).
Kind of like Excite@Home, Chello provides broadband services to the major broadband networks, such as cable companies.
Although, the company is in the nascent stages. So far it has 171,000 subscribers. Revenues were $7.3 million in 1999 and losses were a staggering $140 million. Then again, the company is building out its infrastructure.
SOAP: Cleaner Technology?
What is SOAP?
Reply: SOAP stands for Simple Object Access Protocol. It's a standard that allows software to communicate over different types of technology environments. There are big players backing it, such as Microsoft and IBM. Apparently, SOAP is much easier to implement than other enterprise services like CORBA (Common Object Request Broker Architecture). Whats more, the SOAP protocol is based on XML (extensible markup language), which is becoming a standard in the corporate environment (XML allows for seamless interchange of corporate data).