eMailbag Monday: GeoCities To Price Today, Reader Emails
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Heads Up: Websteader GeoCities is scheduled to price today and start trading tomorrow. It may send a rumble of its own through the market, despite the choppy waters lately for IPOs. Being a top 10 Web site and pioneering a new concept on the Internet is a formidable combination in our view. Other Internet IPOs due this week include CitySearch, Digital River and 24/7 Media. Look for them all soon in ISDEX, the leading Internet stock index.
And now emailbag Monday:
"I have been following your preview of the GeoCities IPO with great interest over the past few weeks. But the one biggest thing that can help people like me is to know how to get in on this IPO. Can you advise me on that? Who do I contact to purchase this IPO?
Who is the lead manager for this IPO? And will the common man, such as myself be allowed a sniff of this IPO? Or is it going to be like the Broadcast.com IPO which was available only to the fat cats? And the common man had to purchase it at market price (after the jump) and many have already lost a packet on Broadcast.com."
GeoCities underwriting is led by Goldman Sachs. Those who lost a packet on Broadcast.com may not have held on long enough but it's a good general rule never to put a buy order in at market price. Always establish your criteria for investing--set the top and bottom.
"What is happening to AOL?? The biggest story in your whole industry, in my opinion, is how a "cheap" company like AOL can fall over 30% through great earnings. This should be a tell-tale sign that if you don't live by fundamentals, you won't die from fundamentals--you'll die from some institutional/insider sell off. This is an indication that the Internet frenzy is a speculative bubble, isn't it?"
Reply: Beware media labels and convenient tag lines such as "speculative bubble." AOL fell on its earnings news due to uncertainty over how the acquisitions of Mirabilis-ICQ and NetChannel would affect net income. Earnings before charges beat the 'Street easily. Once the final net was released AOL shares rebounded somewhat. We think AOL is a core Internet stock and the only firm yet to have beaten Microsoft handily in this arena, a feat easier said than done.
"I thought you had mentioned the stock (CNKT) in a interview and again in the Internet Stock Report just a few weeks ago, but I can't find the report. Can you help?"
Reply: We think e-commerce software maker Connect (NASDAQ:CNKT) could be a technology takeover play as it struggles for revenue growth. Maybe some larger firm could absorb its code base.
"Any sleeper Internet stocks that you like?
Reply: Some people believe Tech Squared (OTC:TSQD) may be a back doorway to buy shares in upcoming IPO Digital River. Many DR execs came from Tech Squared which owns 23% of Digital River before the IPO, and about 18% of Digital River after the IPO. TSQD trades at about 1.6x sales in our estimate. But do you really want to own TSQD when Digital River itself may follow a Cyberian Outpost (NASDAQ:COOL) trajectory?
We think Sportsline (NASDAQ:SPLN) may be at attractive levels. Vocaltec (NASDAQ:VOCLF) could be worth a look or two if IP communications takes off as expected. It was $33 per share and now trades near its low despite sales increasing. Firewall software maker Cyberguard (NASDAQ:CYBG) could find some legs if its partnering pays off. Overall, keep your eyes open this week as a slew of IPOs debut. If GeoCities goes ballistic then it could ignite Internet stocks once again.
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