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Electric: Internet Stocks Gain 18% in Past Week

Just when it looked like Internet stocks would wilt from the summer heat Wall Street turns on the summer of love. Said another way, if Bob Dylan sang this one it'd be "knock knock knockin' on heaven's door," as ISDEX, Internet Stock Index, climbed a phenomenal 18% since June 16.

We count the price-weighted ISDEX in the tally but even the geometric average showed 13% upside. Causing the fete de 'Street was a handful of stocks in each sector. We painstakingly divided up ISDEX's 50-strong band of angels into understandable groups in the table below: content, access, commerce retailers, commerce-enablers, navigation, software, security, IP communications, and high-speed solutions.

In true Internet fashion, the lines between them blur here and there where any one firm is a hop away from getting into a new revenue stream by offering similar services or sellthrough.

More Than a Little Wing: ISDEX June 16 - 23

Mecklermedia's   23-Jun-98 % change Point change
ISDEX ®   close from from
The Internet Stock Index     16-Jun-98 16-Jun-98
where Wall Street meets the Web        
ISDEX Geometric Avg.   150.88 13.1% 17.52
ISDEX Price Wtd.   1,695.41 18.4% 263.78
NASDAQ   1,844.57 5.2% 91.45
DJIA   8,828.46 1.9% 163.17
         
         
CONTENT        
CNET CNWK $67.56 48% $22.06
Sportsline USA SPLN $36.00 20% $5.88
WavePhore WAVO $12.63 9% $1.00
Mecklermedia MECK $21.00 3% $0.63
NewsEdge NEWZ $8.75 -35% -$4.63
TOTAL   $145.94   $24.94
WEIGHTED AVERAGE   $29.19 25% $4.99
         
ACCESS/SERVICES        
Earthlink Network ELNK $76.38 32% $18.38
Mindspring MSPG $78.38 31% $18.63
PSINet PSIX $12.75 23% $2.38
Concentric CNCX $27.00 14% $3.38
Metricom MCOM $8.75 -5% -$0.50
TOTAL   $203.25   $42.25
WEIGHTED AVERAGE   $40.65 26% $8.45
         
COMMERCE RETAILERS        
Amazon.Com AMZN $92.69 26% $19.06
N2K NTKI $18.50 25% $3.75
Onsale ONSL $27.50 24% $5.38
CDnow CDNW $18.88 10% $1.69
E*TRADE EGRP $21.13 1% $0.22
Egghead.com EGGS $8.13 -2% -$0.13
TOTAL   $186.81   $29.97
WEIGHTED AVERAGE   $31.14 19% $4.99
         
         
COMMERCE ENABLERS        
CMG Info CMGI $60.75 33% $15.13
USWeb USWB $23.81 24% $4.56
Network Solutions NSOL $44.38 20% $7.38
Doubleclick DCLK $43.19 19% $6.75
CheckFree CKFR $27.31 14% $3.38
CyberCash CYCH $14.50 3% $0.44
CKS Group CKSG $20.75 -1% -$0.25
TOTAL   $234.69   $37.38
WEIGHTED AVERAGE   $33.53 19% $5.34
         
         
NAVIGATION/AGGREGATORS        
Excite XCIT $82.75 23% $15.44
Yahoo! YHOO $148.06 21% $26.13
Lycos LCOS $68.75 21% $12.00
America Online AOL $106.25 19% $17.25
Intuit INTU $57.50 15% $7.31
@Home Network ATHM $39.25 6% $2.25
Infoseek SEEK $30.44 -8% -$2.69
TOTAL   $533.00   $77.69
WEIGHTED AVERAGE   $76.14 17% $11.10
         
SOFTWARE        
RealNetworks RNWK $36.00 39% $10.06
Broadvision BVSN $19.44 19% $3.13
Open Market OMKT $18.13 19% $2.88
Spyglass SPYG $11.50 14% $1.38
Netscape NSCP $26.19 8% $1.91
Open Text OTEXF $15.19 -3% -$0.44
Versant Object Technologies VSNT $4.38 -4% -$0.19
TOTAL   $130.81   $18.72
WEIGHTED AVERAGE   $18.69 17% $2.67
         
         
SECURITY        
Verisign VRSN $38.25 41% $11.13
Cylink CYLK $10.44 16% $1.44
Network Associates NETA $45.31 11% $4.44
Axent AXNT $29.38 10% $2.69
Cyberguard CYBG $8.88 8% $0.69
Security First Net Bank SFNB $10.50 6% $0.56
Secure Computing SCUR $9.00 4% $0.38
CheckPoint Software CHKPF $28.63 3% $0.88
Security Dynamics SDTI $17.09 -10% -$1.91
TOTAL   $197.47   $20.28
WEIGHTED AVERAGE   $21.94 11% $2.25
         
IP COMMUNICATIONS        
IDT Corp IDTC $28.00 9% $2.38
VocalTec VOCLF $11.63 7% $0.75
TOTAL   $39.63   $3.13
WEIGHTED AVERAGE   $19.81 9% $1.56
         
HIGH-SPEED SOLUTIONS        
PairGain PAIR $19.13 38% $5.25
Broadband Technologies BBTK $4.69 -4% -$0.19
TOTAL   $23.81   $5.06
WEIGHTED AVERAGE   $11.91 27% $2.53
         
         
OVERALL TOTAL   3,673.80 18% 562.70
SIMPLE AVERAGE   54.03 18% 8.28

Much of the movement stems from the geekfest brewing striking a chord. We reiterate the way the mergermania and plain old common sense pairings could play out in the next 18 to 24 months on our back of the napkin scribble that looks like this:

AT&T + Yahoo; Sprint + Earthlink + Excite; MCI + Mindspring + Lycos; NBC + CNET 100%; Time Warner + AOL; IBM or Sun + Netscape.

What we have look like disparate elements of the same goal = a complete or rounded Internet experience. This scenario is speculation but we suspect may range from partnering to full acquisition.

A closer look at the pops and drops:

  • CNET (NASDAQ:CNWK) continues to find favor after its June 9 agreement whereby NBC will acquire 4.99% in CNET for $26 million and a 19% ownership stake in Snap! CNWK was a $30-$35 stock before the deal fever began. Closes June 23 at $67.56 per share.

  • Earthlink (NASDAQ:ELNK) and Mindspring (NASDAQ:MSPG) give more of the right stuff that got them to the top of the access heap this year; Earthlink through new marketing arrangements and Mindspring through a relentless acquisition spree that goes on and on and on with the latest being ISPs in Florida and Louisiana.

  • Amazon (NASDAQ:AMZN) more than doubled since we wrote our report on its possible room to go up in the April 24th edition of Internet Stock Report. The big deal was music, backed up by deep pockets through its $325 million bond placement. Rivals CDnow (NASDAQ:CDNW) and N2K (NASDAQ:NTKI) also post positive percentages. We expect a showdown in the exclusive sponsor space as Amazon, which bought the book space on many high-traffic sites, bumps deals with the other two, both of which bought the music sponsorship on many of the same sites.

  • Having spurned Zapata's fruitless bid, Excite (NASDAQ:XCIT) seems to be the target of target talk. Especially since peer Infoseek (NASDAQ:SEEK) sells almost half of itself to Mickey Mouse for what looks like "Mickey Mouse" prices--we figure $15.27 per share. See ISR Archives, June 19 for that. Impatient SEEK shareholders may want to consider, however, what future value Disney brings to SEEK before e-mailing the bearded ladies investment club for advice (as you may have heard, they are off a few percents here and there).

    The driver behind Internet stocks these days is deals and steals. All along the watchtower investors listen for the next act to take center stage. Content? Commerce? Security? The latter seems overdue for a tune.