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eMailbag Monday: Can Inktomi Buck the IPO Bear Market?

Ever since we profiled the planned initial public offering of Internet software maker Inktomi, dozens of readers have asked us to alert them about when and if it goes. The latest buzz has Inktomi scheduled to price Monday, June 8, and start trading Tuesday.

The IPO comes at a time when the Internet Stock Index (ISDEX), the market's clear leader in how Net stocks perform, is down more than 40% since Inktomi first filed its intentions.

We think that could cost Inktomi a little on its pricing and shares offered. Even so, if the market picks up in a few months it can always do a follow-on offer to make up for any cash left on the bear's table today. Check out our analysis on Inktomi in the Archive, Morning Report, April 21.

And now for emailbag Monday.

The first reader up this week poses this question:

"Can you give us an idea what you think may happen with the federal decision coming out on domain names. Will competition force NSOL down?"

Reply: As you saw Friday, Network Solutions (NASDAQ:NSOL) soared 21% to $39.25 per share after a White House recommendation regarding domain name policy favored a slower changing of the guard. We think NSOL could hold onto a substantial market share despite competition. Profit takers may have a few points here on that kind of jump.

Searching For Answers

"What do you think I should invest in SEEK for a long term? Do you think it will gain it back to 48 dollars?"

Reply: Infoseek (NASDAQ:SEEK) currently has about $700 million market capitalization or $22.75 per share price. Last time we did an analysis we thought SEEK could be a $29 stock, and that was just before it skyrocketed to north of $45. Long term we believe any one of the navigation sites has a chance at doing insanely great things.

For Infoseek, however, we're asking one perplexing question: What exactly does its slogan "once you know, you know" mean? It tells us nothing about the firm or what it does.

View From Here

"I was wondering if you could give an opinion on a company called Intervu (NASDAQ:ITVU) that does "rich media" Internet advertising. I would like a short term and long term view on the stock."

Reply: InterVU makes a neat product that lets advertisers put video in ad banners. Total revenues for the three months ended March 31, 1998 was $113,000. As I said, neat product . . .

Thunder Down Under

"Do you think OZEMY has the potential to be the portal of choice in Australia? If yes, how would you value it in reference to AOL which is a portal & online link as is OZEMY?"

Reply: We've always liked OzEmail (NASDAQ:OZEMY) which trades at just over 3x revenue, according to our analysis, while U.S. peer Earthlink Network (NASDAQ:ELNK) trades at we what think may be 6x. And OzEmail is the leading Web/online service in Australia, one of the most wired nations on the globe.

Going Down?

"What about Yahoo! (YHOO): From 129 to 104 in a few days. I bought at 99 and probably I won't sell, but I'm disorientated by all these up and downs. What's your opinion?"

Reply: Yahoo! has a lot of potential. But we think it's the first few minutes of a long match ahead. Just as in the beginning of the PC era there were early leaders that many expected to be perpetual leaders, some made it and others did not. So far Yahoo! has made some great moves.

Concerns for us: Unsold ad inventory and the ability to deliver commerce promises (which are based on delivering viewers).

That concern goes across all of the Web navigation sites that sold the future. If they deliver the "viewers" then that'll be proof of great expectations. Right now they are all in the proving ground stage. Yahoo! could be the Disney of the Internet space. Or it could be the TBS. Relative to the past, it's done more than fantastic; relative to the future, let's stay tuned.

Coming this week in Internet Stock Report: A special report on ISPs, IPOs and a few more acronyms. Spread the word.