eMailbag Monday: Broadcast.com, E-Loan, CMGI-MSGI, More
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First reader up this week writes:
"Can you identify the rivals to Broadcast.com?"
Reply: with Yahoo announcing its $5.6 billion bid for Broadcast.com (NASDAQ:BCST) that's the question on everyone's mind. These are a few public companies: RealNetworks (NASDAQ:RNWK), which has run on deal expectations before and now; Audiohighway (NASDAQ:AHWY), a smaller cap play, TCI Music (NASDAQ:TUNE), which has SonicNet. private companies: MP3.com (IPO pending), Musicmatch.com.
Sports Line's Line
Reply: Right now SPLN to me looks fully valued. I also believe that Sportsline's greatest asset is the stable of athletes it has signed to its Web site. Revenue growth appears strong but commerce needs boosting. Overall I like Sportsline's story but see potential untapped. If it executes well on the commerce side then the upside looks there in my eyes.
Wit, Beyond Brew
"Looking forward to hearing your views on the "e-manager" Wit Capital, who's just filed their S-1. Plus, they've got Goldman investing $20-odd million for 22% of the firm this past week, and they've added a whole string of new key hires recently, included Merrill's "all-star" Internet analyst Jonathan Cohen.
Are they ready for take-off? Do you have any idea what percent allotment they've been getting, for the deals they've been on? Doesn't say much about that in the filing.?"
Reply: Goldman acquiring 22% of Wit Capital looks like it could be setting itself up to acquire majority at some point. On the prospect front I think Wit has an interesting model that's under development. While at Merrill Lynch Cohen called Amazon a $40 stock. Since then AMZN split 3-for-1 and rose to $171 as of April 1. But his first tout at Wit was a buy on Priceline.com.
"I have a questions for you, at least I am interested in your views or opinion. Online mortgage transactions appears to (to me) to be a viable sector worth exploring. I don't see much activity in this area, other than Finet Holdings (FNHC), and EGroup which has filed an IPO for its mortgage unit ELoan, and lenders such as Countrywide with an on-line presence.. What do you think, is this or can this be an emerging sector via the Net, and who are the players one might look at from an investment perspective. Thanks in advance for you comments."
Reply: I believe online mortgages are the future of mortgages. Who wins? whoever has the home buyers. Finet (NASDAQ:FNHC) is more speculative than many would believe. E-loan looks like it could rocket. Here's why: Web outlets include Yahoo!, E*Trade, DLJdirect,Telebank, CBS MarketWatch and Motley Fool. And last year E-loan processed about $1 billion in loans over the Web. For all that, however, it posted $6.8 million revenue for itself. So the market is early.
Directly Spun Off
"In Investors Business Daily today MSGI, an Internet marketing company partially owned by CMGI, was on the most price gained list showing a 6x volume increase. It also indicated that the RS is at 99 and the EPS is at 21 with a group strength of A. This is the 1st time that MSGI has this type of exposure. Most likely more days like this to come. Would you consider looking into this company?"
Reply: March 10 Marketing Services Group (NASDAQ:MSGI) agreed to acquire CMGI's (NASDAQ:CMGI) wholly-owned subsidiary, CMG Direct Corporation, including PermissionPlus. You can view it two or three ways: 1) CMG getting out of its old direct marketing business; 2) MSGI boosting its Internet and direct marketing business or 3) the combination of a new direct marketing firm. I tend to see it as CMGI getting out of the old direct marketing business more than anything else.
Accolades for Internet Stock Report:
"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