A Look at the ISDEX Newcomers

As technology changes and consolidation alters the Internet landscape, it
is inevitable that some
companies with early promise fade and others emerge to help shape or
even dominate their markets.

Early this month we took note of some of these trends by adjusting the
mix of companies in internet.com’s Internet Stocks Index, or ISDEX. Five
companies were added and a corresponding five removed from the list of
50 stocks.

The five companies joining the ISDEX are Ameritrade Holding,
eToys, , MP3.com and Net2Phone.

They replace CyberCash (CYCH), Infoseek (SEEK), Network
Associates
(NETA), ONSALE (ONSL) and Preview Travel (PTVL).

At the time of the changes, the companies taken off the ISDEX had a
total market capitalization of $5.2 billion, while the five added to the
index had a capitalization of $17.3 billion.

Here are brief profiles of the newest additions to the ISDEX:

Ameritrade Holding (AMTD)

The discount securities broker-dealer battles Charles Schwab, E*TRADE
and numerous others for supremacy in the growing online trading market.

As part of its bid to gain the upper hand, Ameritrade announced
Wednesday an agreement with Sprint PCS Group that will allow investors
to trade over the Internet using wireless phones. The companies say the
service, which they call the first of its kind, will be available later
this month.

In last September, Ameritrade said it planned to release (by year’s end) a
daily report on the buying and selling activity of its online investors,
including which equities were most active.

Based in Omaha, Neb., Ameritrade Holding is divided into four
subsidiaries: Accutrade and Ameritrade, both of which allow investors to
trade via the Internet, telephone or fax; Advanced Clearing, a clearing
service for securities brokers; and AmeriVest, a discount brokerage for
financial institutions.

Revenue through the first two quarters of 1999 was $164 million, with a
net income of $17 million in the same period.

Ameritrade’s market capitalization is about $3.2 billion. Shares of Ameritrade
were trading Wednesday morning at $18.56. The company went public in
March 1997.

EToys (ETYS)

Etoys is an online seller of children’s products such as toys, games,
videos and software.

After a highly successful 1998 holiday season — with $23 million in
revenue for the quarter ended Dec. 31 — the Santa Monica, Calif.-based
e-tailer has attracted a crowd of competitors this year, including
Amazon.com, Wal-Mart, Toys “R” Us and Kbkids.com.

Etoys was founded in 1996 by former Disney executive Toby Lenk and Bill
Gross, founder of the idealab! Start-up incubator. Located in Santa
Monica, Calif., the company went public in late May, raising $166
million.

Revenues in eToy’s first quarter of this year, ended June 30, were $8
million, compared to $381,000 in the same quarter in 1998. About
two-thirds of the company’s annual sales come in Q3, from October
through December. Losses grew from 4 cents per share to 21 cents per
share for the quarter.

ETYS shares were trading early Wednesday afternoon at $78 each, giving
the company a market capitalization of about $9 billion.

iXL Enterprises (IIXL)

Internet services company iXL Enterprises provides strategy consulting,
e-commerce systems and Web site development and hosting to customers
building businesses online. Among its clients are BellSouth, Gateway,
Lucent Technologies and Time Warner.

Competitors of iXL, located in Atlanta and founded in March 1996,
include IBM, Sapient and USWeb/CKS.

Revenue for the six months ended June 30 was $78.9 million, compared to
$17.4 million in the first half of 1998. The net loss for each period
was $34.6 million and $16.6 million, respectively.

iXL went public in early June, and IIXL shares were trading Wednesday
afternoon at $35.94, which translates to a current market cap of $2.5
billion.

MP3.com (MPPP)

Music Web site MP3.com offers thousands of songs for users to download
and play via the increasingly popular data-compression format for audio.

Most of the songs are from “undiscovered” artists, and most can be
downloaded for free. The majority of MP3.com’s revenue comes from
advertisers buying space on its site. The company also sells compilation
CDs that it mails to customers.

MP3.com was founded in March 1998 and is based in San Diego. Among its
competitors are CDNow and Emusic.com.

The company had $2.6 million in revenues in the first half of the year
against losses of $7.7 million.

MP3.com went public on July 21, raising $344 million in an offering of
12.3 million shares at $28. Trading opened at $92 per share.

As of Wednesday afternoon, MP3 was selling at $46 per share, giving the
company a market cap of $3.1 billion.

Net2Phone (NTOP)

Internet telephony services provider Net2Phone enables users to make
phone calls via the Internet to regular telephones or PCs equipped with
telephony software and hardware.

Founded in 1997, the company is 57 percent owned by telco IDT. It makes its
money by charging for calls on a per-minute basis, and is the No. 1
Internet telephony service provider, serving 250,000 customers.
Competitors include AT&T and RSL Communications.

Net2Phone has marketing agreements with portals such as Yahoo! and
[email protected] Last week it announced a deal with America Online’s ICQ
unit to offer a prepaid “virtual calling card” that will route calls
over Net2Phone’s network.

Revenue for the quarter ended July 31 was $11.1 million, compared to
$4.1 million in the year-ago period. Losses rose from $2.9 million, or 9
cents a share, to $3.9 million, or 10 cents a share. Net loss for the
quarter was $18.4 million, due mostly to a one-time expense for employee
stock options.

Based in Hackensack, N.J., the company went public on July 29, raising
$81 million in an offering of 5.4 million shares. Its stock was trading
Wednesday afternoon at $59.94, which gives the company a current marketcap of $656 million.


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