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Down 13% in a Week: ISDEX Softens But Leads Market YTD

In a bout of market selloff that trounced the Dow like Peewee Herman at a WWF wrestling match pitted against Alan Greenspan on steroids it's no wonder that ISDEX is down 13% since July 28. The Dow dropped nearly 300 points on August 4 and is off more than 447 points the past seven days. That's 5% lost for the big iron index.

Against that backdrop, however, consider that on a price weighted basis ISDEX gained 51% year to date and the Dow only 7.3%. Maybe Wall Street is beginning to believe that we are on the threshold of a digital era vs. industrial one. You wouldn't know that from the past week, however:

ISDEX .

04-Aug-98

% change

Point

% change

The Internet Stock Index

close

from

change

from

28-Jul-98

28-Jul-98

31-Dec-97


ISDEX geo. avg.

127.38

-13.3%

-19.46

27.5%

ISDEX price wtd.

1,375.08

-15.6%

-253.86

50.9%

NASDAQ

1,785.64

-5.8%

-110.89

13.7%

DJIA

8,487.31

-5.0%

-447.47

7.3%


Open Market

OMKT

$16.00

2%

$0.38

66%

Metricom

MCOM

$7.75

1%

$0.06

-19%

Mecklermedia

MECK

$22.88

-2%

-$0.50

-8%

America Online

AOL

$111.00

-3%

-$3.25

145%

RealNetworks

RNWK

$29.00

-4%

-$1.13

109%

USWeb

USWB

$19.88

-4%

-$0.88

112%

CheckFree

CKFR

$23.66

-4%

-$1.09

-12%

CKS Group

CKSG

$18.19

-5%

-$0.94

29%

PairGain

PAIR

$12.94

-5%

-$0.69

-33%

Sportsline USA

SPLN

$25.44

-6%

-$1.50

137%

CMG Info

CMGI

$66.63

-6%

-$4.00

340%

N2K

NTKI

$14.13

-6%

-$0.88

-3%

CheckPoint Software

CHKPF

$21.88

-6%

-$1.38

-46%

Excite

XCIT

$38.50

-6%

-$2.50

157%

Security First Net Bank

SFNB

$20.25

-6%

-$1.38

179%

Versant Object Technologies

VSNT

$3.63

-6%

-$0.25

-74%

Yahoo!

YHOO

$85.13

-7%

-$6.50

146%

E*TRADE

EGRP

$25.13

-7%

-$2.00

9%

Amazon.Com

AMZN

$109.88

-8%

-$9.06

265%

Network Associates

NETA

$45.13

-8%

-$3.75

-15%

Open Text

OTEXF

$14.13

-8%

-$1.25

6%

Infoseek

SEEK

$23.25

-8%

-$2.13

116%

Onsale

ONSL

$24.19

-9%

-$2.44

34%

Axent

AXNT

$21.88

-10%

-$2.31

27%

Broadvision

BVSN

$19.75

-10%

-$2.25

204%

@Home Network

ATHM

$40.25

-11%

-$4.75

60%

Lycos

LCOS

$53.50

-11%

-$6.75

29%

Earthlink Network

ELNK

$34.38

-11%

-$4.44

167%

Spyglass

SPYG

$10.38

-12%

-$1.38

110%

Cyberguard

CYBG

$7.94

-12%

-$1.06

41%

Mindspring

MSPG

$40.44

-12%

-$5.56

261%

IDT Corp

IDTC

$23.02

-12%

-$3.23

14%

Network Solutions

NSOL

$32.88

-13%

-$5.13

150%

WavePhore

WAVO

$9.94

-15%

-$1.75

6%

Verisign

VRSN

$30.13

-15%

-$5.50

115%

VocalTec

VOCLF

$9.88

-16%

-$1.88

-52%

Secure Computing

SCUR

$10.63

-16%

-$2.06

-10%

Netscape

NSCP

$25.06

-16%

-$4.94

3%

Intuit

INTU

$44.03

-17%

-$9.03

7%

CyberCash

CYCH

$10.69

-18%

-$2.31

-16%

Doubleclick

DCLK

$36.63

-18%

-$8.00

115%

Security Dynamics

SDTI

$11.63

-21%

-$3.00

-67%

Cylink

CYLK

$10.38

-21%

-$2.69

6%

Concentric

CNCX

$20.75

-21%

-$5.50

134%

PSINet

PSIX

$15.25

-21%

-$4.13

198%

CDnow

CDNW

$12.50

-24%

-$3.88

-22%

NewsEdge

NEWZ

$6.94

-24%

-$6.44

-48%

CNET

CNWK

$42.13

-25%

-$14.25

43%

Broadband Technologies

BBTK

$3.06

-29%

-$1.25

-26%

Egghead.com

EGGS

$12.56

-32%

-$6.00

93%


TOTAL

1,375.08

-11%

-166.48

51%

SIMPLE AVERAGE

27.50

-11%

-3.33

51%


(c) 1998 Mecklermedia Corp. www.Internet.com

Here's the oxymoronic part. The broad market rightly ought to take its cues from the Asian flu and Greenspan's latest oration. But Internet stocks have at least one thing going for them that industrial-era stocks don't have: phenomenal potential growth in the U.S.

They don't need Asia to maintain triple digit sales and market share penetration.

If anything, Asia needs the Internet to boot strap itself out of theatre economics into the globalsphere of a digital commerce environment.

U.S. market share for e-commerce in particular is at an extremely nascent stage. Consider the 5 million to 10 million small- and medium-sized businesses that are not on the Web and don't have a clue as to how to get on it.

USWeb (NASDAQ:USWB) wants this segment to some extent but it's larger than that. Nobody's holding the hand of the everyday retailer and porting them over to the future, except the local ISPs. In fact, local ISPs are behind the huge growth in consumer Internet usage also.

They walk users through the process and are available with a phone call. And now you know why there's more ISPs this year than last and why a trade show like ISPCON is growing like gangbusters. Mecklermedia's (NASDAQ:MECK) The List shows 4,861 ISPs.

If Microsoft (NASDAQ:MSFT) had its druthers it would be doing deals with ISPs for turnkey Web etailing. Ninety percent of businesses in the world are small ones. Suggestion: Windows 99 and an "e-commerce shop" wizard for businesses, complete with backend transaction processing and local ISP connections. All right, no more ideas for Bill.

As ridiculous as this sounds there isn't a national turnkey company that gets this huge segment on the Web in 5 easy steps, outsourcing the whole thing and sending mom and pop hardware a check each month for its Web sales effort.

It's amazing that while the telcos go to the altar in mega-billion marriages and get giddy over wires crossing each other, none of them leverage their own phone client base into Web etail packages.

Yahoo! (NASDAQ:YHOO) may get there first if its Viaweb acquisition goes that way.

Speaking of which, Amazon (NASDAQ:AMZN), which just did $280 million stock deals for shopping search engine Junglee and dynamically-updated Web-based contact service PlanetAll, may become Yahoo!'s largest rival in ecommerce/marketing very soon.

In a market with the wind knocked out of it, how will some of the IPOs in the pipeline fare? We expect GeoCities (proposed symbol:GCTY), scheduled to price next week, to do well.

If Broadcast.com (NASDAQ:BCST) gained 279% in its first day, GeoCities is in a better class. If GeoCities' IPO rockets it could open the window for two or three others in the community space. The ones we're watching: Angelfire, XOOM, and WhoWhere.

The IPOs of Digital River, CitySearch and eBay may do "ok." eBay, the pioneer in its space, may get noticed the most. CitySearch will be worth noting in its valuation since local Web guides are not floating on Wall Street except for AOL's Digital Cities, but that's lost in AOL's borg-like structure.

Digital River may be in line with Cyberian (NASDAQ:COOL) which popped and dropped quickly. As far as playing Digital River by buying shares of bulletin board stock TechSquared, which owns about 18% of Digital River after the offering, we think that's a lot of work for questionable return. Most of TechSquared's old management now runs Digital River. If this was the Pony Express do you bet on the old horse or the one that just took the rider for the next leg?


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