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eMailbag Monday: Readers Ask About Commerce, CDNow, Connect

First reader up this week writes:

"With Internet-based commerce growing, myself adding to the phenomenon, I've considered package shipping companies such as Airborne Freight and Federal Express to benefit tremendously from the trend. What are your thoughts of the secondary beneficiaries of e-commerce?"

Reply: We need only look as far as the recent U.S. Postal strike to see how reliant the bevy of shipping firms are for commerce in general. In particular, though, the introduction of the Internet and its spawning of "virtual enterprises" (Amazon is an example) brings to the fore the value of express delivery services.

Said another way, FedEx or any shipper used is an integral part of Internet commerce. It relies on these firms for fulfillment in the absence of storerooms, showrooms, and stores. As such, we would expect a dramatic jump in shipment via these carriers as Internet commerce accelerates.

When See IPO?

"Congrats on having such an informative, entertaining service. I have bought several CDs through CDnow. I like the company's site and service. I heard that it will be going public soon. Do you have any details about that?

"How do you think it would fare in competition with NTKI? N2K gets good plugs through AOL and MTV, but CDnow is also well known and has its share of alliances. I suspect that its balance sheet might also be better than that of N2K, but at this point I can't get enough info on either company to confirm that."

Reply: CDNow's initial public offering is cued up, and we'll play our analysis right here in Internet Stock Report soon.

FTP Me

"I have put a lot of money in buying FTP Software (FTPS) shares because I believed in the Vitual IP (VIP) strategy, but FTP share falls day after day and is currently traded below its book value. Do you think that FTP Software still has a future with the expansion of the intranet and the Web-to-host concept along with the booming of e-business? What do you think about the VIP strategy? Shall I sell the shares or hold them?"

Reply: FTP Software's (NASDAQ:FTPS) strategy seems partly to aim at the virtual IP market, one that could blossom. Yet strategy and implementation are two different things in our book. The market may grow and FTP may not, or vice versa. We're waiting for FTP's revenue to grow in line with some of the other hot stocks. As for giving you specific market advice on buying, selling, or holding, we don't. See the Disclaimer below. The purpose is to get you to know the industry, know your companies, know their customers. It's your money.

disConnect?

"You covered Broadvision. What about Connect? I have been doing some homework on this company. It has been making some very good moves for a small player. Maybe the surprise from the group in the near future. What do you think?"

Reply: In our view Connect (NASDAQ:CNKT) hasn't connected yet with its market or Wall Street. Evidence comes via its low sales as we outlined in ISR Jan. 22.

Wahoo!

"Wow, a whole lot of food for thought (ISR Jan. 23). You seem (although I could be wrong about your implications) to be implying that the value of the browser is declining. However, it represents the base portal to the client (the other primary portal being the server).

"Market share is only important in that it allows Netscape or Microsoft to control the standards to this portal. What they do with that control is then most important. Apply the OS model to browsers.

"How can Netscape use its control of the browser standard to its advantage? Are there add-on apps (like Word, Excel) that will rest on top of the browser? If not, then the value is in the control of the interface, as you suggested."

Reply: Browser functionality, in our view, has been replaced in large degree with Web sites and hyperlinks, especially from the navigation networks. Browsers frame the Web, but we think over time they will be more in line with "viewers" than hyper-icons that "drive" the user.

In that sense viewers manipulate the Web content and present it in various ways the user wants, while the actual movement through the Web could very well be done off of the navigation networks entirely.

You can already do most of your Web use on a few key sites and use those sites to take you elsewhere. The browser should give users more format options for content and how its displayed, printed, sent, or received. For 17 million people a month Yahoo! (NASDAQ:YHOO) is effectively their browser.



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