RealTime IT News

Surprise! Wall Street Looks For Non-Brands For Once

All year long there's been a lovefest for big brands, big bucks and the get big fast Internet firms. You know the names. Our latest tally of ISDEX ups and downs for the past week shows some of the "smallbies" bobbing at the top for a change. Quite simply, as the big brands keep rising we think it's getting harder to find value (or justify valuations!).

"Buy small" may be the new mantra as investors start to see growth in revenue and users/customers in emerging Internet firms: ad-network 24/7 (NASDAQ:TFSM), software e tailer Beyond.com (NASDAQ:BYND), ad-network leader DoubleClick (NASADQ:DCLK), Web-hosting provider Exodus (NASDAQ:EXDS) and renewed interest in IP communications pioneer/leader Vocaltec (NASDAQ:VOCLF).

It's notable that flavors of the week in recent weeks seem to have stalled: Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Broadcom (NASDAQ:BRCM), and Inktomi (NASDAQ:INKT).

As Christmas approaches and Internet users who are eager to avoid the crowds point and click their way to instant Santa Claus-dom, we'll be keeping a closer eye on anything that enables the magic of couch-potato shopping, such as e-tail stocks like AMZN, and CDnow (NASDAQ:CDNW).

ISDEX (

03-Nov-98

% change

The Internet Stock Index

close

from

27-Oct-98

ISDEX

171.24

6.5%

NASDAQ

1,788.43

4.1%

DJIA

8,706.15

4.1%

24/7 Media*

TFSM

$17.38

74%

Beyond.com

BYND

$11.00

52%

Doubleclick

DCLK

$34.38

37%

Network Solutions

NSOL

$64.88

31%

Open Market

OMKT

$7.88

29%

VocalTec

VOCLF

$8.63

25%

Exodus*

EXDS

$32.44

24%

ISS Group*

ISSX

$31.44

17%

CKS Group

CKSG

$22.00

16%

Egghead.com

EGGS

$8.25

16%

Yahoo!

YHOO

$142.13

15%

Spyglass

SPYG

$14.88

14%

Security Dynamics

SDTI

$11.50

14%

USWeb

USWB

$16.63

13%

Network Associates

NETA

$43.94

12%

Earthlink Network

ELNK

$43.25

11%

Broadcast.com*

BCST

$50.00

11%

CMG Info

CMGI

$60.00

9%

Open Text

OTEXF

$13.50

9%

Lycos

LCOS

$41.50

9%

America Online

AOL

$132.50

9%

Amazon.Com

AMZN

$126.06

8%

E*TRADE

EGRP

$18.88

6%

Broadcom*

BRCM

$81.81

5%

Broadvision

BVSN

$17.50

5%

IDT Corp

IDTC

$17.38

5%

Security First Technologies

SONE

$18.00

4%

Cisco

CSCO

$63.38

4%

GeoCities*

GCTY

$34.25

4%

Verisign*

VRSN

$31.00

3%

CyberCash

CYCH

$8.47

3%

N2K

NTKI

$5.81

2%

CheckPoint Software

CHKPF

$23.75

2%

eBay*

EBAY

$84.00

2%

Axent

AXNT

$23.75

2%

Concentric

CNCX

$24.88

2%

Mecklermedia

MECK

$28.44

1%

Excite

XCIT

$38.13

1%

RealNetworks

RNWK

$37.00

1%

Sportsline USA

SPLN

$15.50

1%

CDnow

CDNW

$8.25

1%

PSINet

PSIX

$14.75

0%

Inktomi*

INKT

$83.31

0%

Netscape

NSCP

$23.63

-1%

Mindspring

MSPG

$38.88

-3%

Infoseek

SEEK

$29.63

-5%

CNET

CNWK

$39.63

-6%

@Home Network

ATHM

$43.00

-7%

Onsale

ONSL

$16.00

-20%

Verio*

VRIO

$14.25

-21%

* change from IPO 1998

(c) 1998 Mecklermedia, Internet.com

Among the more notable news behind the moves:

  • 98.10.28 - Amazon.com (NASDAQ:AMZN) posts $153.7 million third-quarter revenue, up an amazing 306% vs. 3Q97. On a GAAP basis, 3Q98 net loss is $0.90 per share, including $20.5 million of merger- and acquisition-related costs (shop comparison engine Junglee, Movie Database and some smaller book sites in Europe). Cumulative customer accounts climb to 4.5 million as of September 30, up 377% vs. a year ago.

    Repeat orders = 64%, again a strong sign of Amazon's "stickiness" with customers. In short, Amazon looks like it may be on its way to becoming the Web's most powerful retailer bar none. The real challenge is creating the infrastructure to enable it. It's probably 20% there by our reckoning, (books and music are two of more than 100 categories it needs to capture to be a truly deep retail experience). A lot can go wrong in the 80% to go. If successful, however, Amazon could be one of the Web's all-time wow stories. So far so good.

  • 98.10.28 - Microsoft (NASDAQ:MSFT) MSN Web service lands the largest advertising commitment on the Web ever with a $90 million ad agreement from First USA, a credit card lender. Term is for five years.

  • 98.10.29 - Infoseek (NASDAQ:SEEK) reports record third-quarter revenue, up 129% to $19.2 million vs. 3Q97. Net loss surprisingly tame at $2.6 million or $0.08 loss per share. Results include $1.4 million merger-related costs associated with the pending Disney-Starwave-Infoseek combination. Pro forma the agreement, Disney will own 43% of SEEK with options to acquire as much as 50.1% at a price no higher than $50 per share. The result of the team up will be evident in the soon-to-debut GO.com, which by combining Infoseek and Disney.com/ESPN/ABC.com will instantly become the third most visited site on the Web behind Yahoo and AOL, according to stats from audience measurement outfit RelevantKnowledge.

  • 98.10.30 - Beyond.com (NASDAQ:BYND) gains 16% to $9.25 per share in a doppler effect following its strong third-quarter results announced October 21. Beyond's 3Q revenues reach $9.7 million, up 102% vs. 3Q97 while loss for 3Q98 is $8.9 million. Beyond sells software via the Internet.

  • 98.11.02 - Yahoo (NASDAQ:YHOO) hits a new all-time high and ends the day up 11% to $145.4375 per share. We attribute it more to investors going with the market leader than any one news item today. The deal announced with Dow Jones for a job search, for example, isn't front page stuff in our opinion and not the caliber of deal to prompt an all-time high.

    As we said earlier, we think Yahoo holds an enviable category leader status.

  • 98.11.02 - Network Solutions (NASDAQ:NSOL) continues to get strong interest, up 16% to $62 per share today. Late last week it launched WorldNIC Japan with ASCII in Japan. Ironically, Prudential downgraded NSOL last week. NSOL is one of my top 10 to watch for 1998 and my belief is simply this: as the default registrar, even with competition coming, Network Solutions has a substantial lead over any possible challenger.

  • 98.11.03 - Versant (NASDAQ:VSNT), whom we've long admired but since retired on our radar, announces a patent for cover the selection of items to be replaced in a cache when the cache has no free space. While we're not clear on what implications this has yet, we consider object-oriented data manipulation paramount to the Web's future. Unfortunately, Versant revenues dropped dramatically to $5.9 million 3Q98 vs. $9.4 million 3Q97 and it may take more than a patent to bring revenues up to historical levels. We think heavy competition in objects has taken its toll on VSNT the stock and Vesant the firm.

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