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ISDEX Ends Up 90%, Gulp!

As news that Yahoo (NASDAQ:YHOO) may announce this morning a $5.7 billion offer for Broadcast.com (NASDAQ:BCST) the item draws to a close a frenzied first quarter for Internet stocks and ISDEX, which jumped 90% year to date. First the Yahoo deal which marks the second time in the quarter that the firm has gone out and bought big. The first time was Geocities. with Broadcast.com I estimate the deal at $475 per unique user, a 58% premium to the average value per user for the top 10 Web sites.

Broadcast.com, however, in my mind, is worth more despite the ridiculous revenue multiple Yahoo is paying. Perhaps Broadcast.com will have to consider changing its name to Broadhoo.

Here's the final bell for ISDEX first quarter 1999, with 21 of the 50 stocks ending the quarter up triple digit--as in more than 100%. Just 10 of the ISDEX index stocks ended the Q down, with Network Associates (NASDAQ:NETA) still bottom feeding after accounting problems zapped its shares, off 54% to $30.6875. Ouch! I think Network Solutions still makes good products however.

ISDEX ®   31-Mar-99 % change 31-Dec-98
The Internet Stock Index   close from close
www.isdex.com     31-Dec-98  
      or 1999 IPO  
ISDEX   546.94 90.8% 286.73
NASDAQ   2,461.40 12.3% 2,192.69
DJIA   9,786.16 6.6% 9,181.43
         
Go2Net GNET $132.63 650% $17.69
iVillage IVIL $100.50 319% $24.00
Doubleclick DCLK $182.06 309% $44.50
CNET CNET $92.13 258% $25.75
CMG Info CMGI $183.06 244% $53.25
RealNetworks RNWK $122.19 241% $35.88
Excite XCIT $140.00 233% $42.06
GeoCities GCTY $109.56 226% $33.63
Broadcast.com BCST $118.19 209% $38.25
Sportsline USA SPLN $45.63 193% $15.56
Verisign VRSN $154.00 160% $59.13
Prodigy PRGY $38.38 156% $15.00
E*TRADE EGRP $58.31 149% $23.39
Security First Technologies SONE $73.50 141% $30.50
Infospace.com INSP $85.75 125% $38.13
Concentric CNCX $74.75 125% $33.25
@Home Network ATHM $157.50 112% $74.25
Exodus EXDS $134.50 109% $64.25
Verio VRIO $46.13 106% $22.38
PSINet PSIX $42.56 104% $20.88
Xoom.com XMCM $67.06 103% $33.00
America Online AOL $147.00 90% $77.56
Broadvision BVSN $59.75 87% $32.00
24/7 Media TFSM $51.50 84% $28.00
eBay EBAY $137.31 71% $80.42
Network Solutions NSOL $105.75 62% $65.44
Amazon.Com AMZN $172.19 61% $107.08
USWeb USWB $41.25 56% $26.38
Lycos LCOS $86.06 55% $55.56
Infoseek SEEK $74.00 50% $49.38
ISS Group ISSX $79.50 45% $55.00
Yahoo! YHOO $168.38 42% $118.47
Mindspring MSPG $86.06 41% $61.06
Inktomi INKT $88.63 37% $64.69
Beyond.com BYND $26.19 26% $20.75
Cisco CSCO $109.56 18% $92.81
Open Market OMKT $12.94 11% $11.69
Earthlink Network ELNK $60.00 5% $57.00
Preview Travel PTVL $19.00 3% 18.4375
Broadcom BRCM $61.63 2% $60.38
VocalTec VOCLF $11.00 -2% $11.25
CyberCash CYCH $14.13 -6% $15.00
CheckPoint Software CHKPF $43.00 -6% $45.81
CDnow CDNW $16.13 -10% $18.00
Egghead.com EGGS $18.19 -13% $20.81
Onsale ONSL $33.56 -16% $40.06
Security Dynamics SDTI $18.63 -19% $23.00
Axent AXNT $24.06 -21% $30.56
Cyberian Outpost COOL $19.75 -28% $27.50
Network Associates NETA $30.69 -54% $66.25

First quarter highlights:

  • 99.01.04 - Network Solutions (NASDAQ:NSOL) climbs 18% to $155 per share on news of a planned 2-for-1 stock split. These excite investors who think they'll be getting 2 shares for 1 and the observation that stocks that split often rise to pre-split levels. Not always though. Others that have announced splits include CMGI (NASDAQ:CMGI) and Inktomi (NASDAQ:INKT). In 1998 Yahoo, AOL, Earthlink, Mindspring to name a few, also split. (How true that was as these splits have mostly soared).

  • 99.01.19 - Time Warner's Road Runner reports 180,000 subscribers at year-end 1998, and adds about 4,000 new customers a week. We think Road Runner is a good candidate to be spun off Time Warner (NYSE:TWX) a la @Home, its larger rival. (And news at the end of March had Time warner talking about doing just that!).

  • 99.02.04 - E*TRADE (NASDAQ:EGRP) service is hit again with bugs that interrupt trading. This is the second day that E*TRADE has experienced problems. If these continue we will remove EGRP from out February HotWatch list in favor of another Web-based broker. However, we also remember when AOL experienced growing pains and it came through it. The trouble of success. 1 in 7 trades occurs on the Web now.

  • 99.02.11 - CMGI (NASDAQ:CMGI) says it may not support the proposed Lycos (NASDAQ:LCOS) merger with USA Networks (NASDAQ:USAI) and Ticketmaster Online-Citysearch (NASDAQ:TMCS), reversing its position after watching LCOS shares drop dramatically after the deal was announced. CMGI owns 20% of LCOS and was its original investor. Internet Stock Report thinks that USA Networks should not be a 61% pro forma owner of the combined entities. It is not clear to us that USA Networks provides that much value to the overall merger. We believe Lycos and TicketMaster Online-Citysearch combined are more valuable properties than USA Networks. While we believe the $6.6 billion market value placed on LCOS in the deal was fair, the 30% position of the combined firms it would own afterwards seems like a low percentage for what it's contributing: one of the largest Internet audiences on the planet, almost on par with Yahoo in overall reach. (Being the only analyst to disagree with the deal terms at least Dave Wetherell and I agree).

  • 99.02.26 - IPO candidate Critical Path just signed a deal with AOL to provide outsourced email services to AOL's 26 million ICQ instant message users. See ISDEX.com IPOWatch for our analysis of Critical Path's filing. (In my pre-IPO analysis I took some heat for saying Critical Path's model looked good, even though its 1998 revenues were non-existent almost. After its rocket launch IPO last week maybe investors start to agree on forward-looking potential).

  • 99.03.24 - ISDEX adds iVillage (NASDAQ:IVIL) effective immediately to replace Netscape, which merged with AOL (NYSE:AOL). And, MiningCo (NASDAQ:MINE) debuts today with its initial public offering, prices at $25, opens at $52, hits a $62.25 high and closes at $47.50 per share on 7.7 million volume. The strength of MINE is it uses real people to filter the best of the Web. The drawback is that real people can only rate so many Web sites given the time limits of 24/7.

    Accolades

    "Fresh and provocative" -CBS Marketwatch, who named Steve Harmon one of the top Internet stock analysts and only independent one honored

    "I am a huge fan of Steve Harmon's analysis" -Kleiner Perkins' John Doerr