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Moves & News: Hot & Not In Internet Stocks Revealed

If you happen to see someone by the nickname "Slick Willie" chatting on AOL's romance connection, then perhaps President Clinton's State of The Union Address may make sense. Caught up in a web of rumors it was Clinton's endorsement of the "Internet" in every home (as opposed to a chicken in every pot) that caught our attention.

Personal lambada aside, Clinton's remarks about the Internet's profound affect on U.S. living are not something to be missed on Wall Street.

Whether or not the Administration has any real impact or bearing on the Internet actually getting in every home is debatable. Congress shall make no tax might be a good step.

Perhaps the biggest advancement government can do would be to actually wire classrooms across the nation, not just talk about it. The Internet turns on the world as library. The logic flows thusly: If kids use the Internet they'll likely grow up and keep using it.

Translation, ubiquity. That could fuel strong growth for companies such as these:

State Of The Net, January 13-27

ISDEX ® Ticker 27-Jan-98 % change Point change % change
Internet Stock Index symbol close from from from
      13-Jan-98 13-Jan-98 31-Dec-97
           
ISDEX Geometric Average   104.31 4.4% 4.39 4.4%
ISDEX Price Wtd. Composite   831.28 2.8% 22.66 1.8%
NASDAQ   1,578.90 2.4% 37.27 0.5%
DJIA   7,815.01 1.1% 82.88 -1.2%
           
Onsale ONSL $ 24.81 41% $7.19 38%
Versant Object Technologies VSNT $ 6.44 26% $1.31 -53%
PSINet PSIX $ 7.19 21% $1.25 40%
CNET CNWK $ 31.00 19% $5.00 5%
Sportsline USA SPLN $ 21.19 19% $3.31 97%
USWeb USWB $ 11.94 16% $1.63 27%
Excite XCIT $ 38.09 15% $4.91 27%
Mecklermedia MECK $ 27.25 13% $3.13 10%
Infoseek SEEK $ 12.03 13% $1.34 12%
Forefront FFGI $ 9.00 13% $1.00 15%
Mindspring MSPG $ 32.81 11% $3.25 -2%
CMG Info CMGI $ 33.13 11% $3.19 10%
Network Solutions NSOL $ 19.81 9% $1.69 51%
Earthlink Network ELNK $ 30.88 8% $2.38 20%
Security First Net Bank SFNB $ 7.38 7% $0.50 2%
Lycos LCOS $ 38.47 6% $2.09 -7%
Concentric CNCX $ 9.91 4% $0.41 12%
Open Text OTEXF $ 11.88 3% $0.38 -11%
America Online AOL $ 91.31 2% $2.06 1%
Amazon.Com AMZN $ 57.00 2% $1.25 -5%
N2K NTKI $ 24.00 2% $0.38 64%
RealNetworks RNWK $ 16.63 2% $0.25 20%
Raptor RAPT $ 12.00 -1% -$0.13 -9%
Trusted Information Systems TISX $ 10.13 -1% -$0.13 1%
Spyglass SPYG $ 5.38 -2% -$0.13 9%
CKS Group CKSG $ 14.00 -3% -$0.38 -1%
Open Market OMKT $ 10.25 -4% -$0.38 6%
VocalTec VOCLF $ 19.00 -4% -$0.75 -7%
CyberCash CYCH $ 11.00 -4% -$0.50 -13%
@Home Network ATHM $ 23.31 -7% -$1.63 -7%
Yahoo! YHOO $ 60.06 -9% -$5.72 -13%
Netscape NSCP $ 16.88 -11% -$2.19 -31%
E*TRADE EGRP $ 19.91 -13% -$2.94 -13%
CheckPoint Software CHKPF $ 34.75 -13% -$5.25 -15%
Security Dynamics SDTI $ 32.50 -14% -$5.13 -9%
TOTAL   831.28 2.8% 22.66 1.8%
SIMPLE AVERAGE   23.75 2.8% 0.65 1.8%

January 27: Netscape (NASDAQ:NSCP) 1997 revenue grows 54% to $533.9 million (10x what Yahoo! or most other Internet firms posted). Yes, it's a different animal, but the revenue still impresses for a three-year old company.

Losses are worse than expected, $115.5 million. But without nonrecurring charges net income would have been $4.7 million, or $0.05 per share. Still not as good as 1996 in the earnings department, however--1998 may be the year Netscape flies or dies as we know it. Big changes ahead.

January 26: Security Dynamics (NASDAQ:SDTI) revenue for 1997 jumps 62% to $135.9 million, while net income, not including nonrecurring items, increases 79% to $23.0 million ($0.58 per share on a diluted basis). Nonrecurring expenses included $7.4 million from merger acquisition costs and purchased technology. The sale of marketable securities offsets charges somewhat and brings net income to $15.6 million ($0.39 per share on a diluted basis).

January 23: Infoseek (NASDAQ:SEEK) seeks capital, plans to sell 2.5 million to 3 million shares of common to be used for general corporate purposes, capital expenditures, and working capital.

Infoseek posts $34.6 million revenue for 1997, up 129%. Fourth quarter revenue is $12.5 million, a 105% increase while net loss reaches $24.6 million, $0.93 per share annual net loss, 4Q net loss of $4.1 million, $0.15 per share.

CheckPoint Software (NASDAQ:CHKPF) exceeds analyst expectations with $82.9 million 1997 revenue vs. $31.9 million for 1996. Net income is $40.2 million for the year or $1.23 per share vs. $15.2 million or $0.29 per share in 1996. Fully diluted earnings per share are $1.07 for 1997 and $0.43 for 1996.

January 22: Netscape (NASDAQ:NSCP) decides to give away its browser and goes a step further by putting the source code on the Web for programmers to use and create new features for it. See ISR January 6 for our timely call to make the browser client free.

January 21: USWeb (NASDAQ:USWB) reports $10.6 million sales on $19 million loss for fourth quarter. Full year results reach $19.3 million sales and $53.3 million loss. USWeb says includes $11.1 million unusual charge for 4Q and $29.6 million for full year. We still think it's early in the turnkey Web solution game and that USWeb may have a lot longer to go to reach critical awareness.

@Home (NASDAQ:ATHM) reports 4Q sales of $3.7 million vs. $535k 4Q96. Full-year sales are $7.4 million vs. $676k. Losses hit $184.4 million for 4Q and $219.1 million for 1997. Looks like a lot of bleeding here but most of this relates to an agreement with Cablevision for distribution. $172.6 million worth.

January 20: AOL (NYSE:AOL) reports it 11 millionth subscriber citing strong sales of sub-$1,000 PCs, which accounted for 40% of all PC sales this holiday season, as the driver.

Spyglass (NASDAQ:SPYG) posts $4.25 million first-quarter revenue ending December 31. vs. $3.88 million 1Q96. Of that, service revenues grow to 39% of all revenue, up from 22% 1Q96. Nesbitt Burns ups SPYG to "buy" from "neutral" and we think that the device market SPYG's aimed at may finally be showing signs of fruition.

January 14: Yahoo! (NASDAQ:YHOO) posts year-end revenue of $67.4 million, up 242% vs. 1996. Fourth-quarter revenue hits $25 million, up 181% vs. 4Q96. Pro forma net income is $2.6 million or $0.05 per share, excluding $3.9 million charges related to the acquisition of Four11, the directory and e-mail company. With that charge, net loss is $1.3 million $0.03 per share.