The general market scare-off that hit Wall Street this week amid concerns
that the Federal Reserve could raise interest rates pulled Internet stocks
in a downward draft as those who don’t believe in long-term value sought
cash quickly. Seven of the 50 stocks in ISDEX managed to beat the drop.
But despite hiccups in the market we believe that critical mass for
Internet use in the U.S. provides tonic relief for long-term investors who
look for businesses rather than fads to invest in.
ISDEX Drops 9% Since April
21
Mecklermedia’s | 28-Apr-98 | % change | Point change | % change | |
ISDEX . | close | from | from | from | |
Internet Stock Index | 21-Apr-98 | 21-Apr-98 | 31-Dec-97 | ||
ISDEX | 162.13 | -9.2% | -16.42 | 62.3% | |
ISDEX | 1,656.22 | -8.6% | -156.75 | 59.0% | |
NASDAQ | 1,831.76 | -3.8% | -72.11 | 16.6% | |
DJIA | 8,898.96 | -3.1% | -285.98 | 12.5% | |
NewsEdge | NEWZ | $ | 22% | $3.00 | 22% |
Cyberguard | CYBG | $ | 12% | $1.69 | 183% |
Broadband | BBTK | $ | 3% | $0.25 | 94% |
Amazon.Com | AMZN | $ | 3% | $2.56 | 59% |
Netscape | NSCP | $ | 2% | $0.56 | 3% |
E*TRADE | EGRP | $ | 2% | $0.38 | 1% |
Mecklermedia | MECK | $ | 1% | $0.25 | -1% |
America | AOL | $ | 0% | $0.31 | 66% |
Intuit | INTU | $ | 0% | $0.13 | 25% |
RealNetworks | RNWK | $ | 0% | $0.06 | 134% |
@Home | ATHM | $ | -2% | -$0.56 | 32% |
Network | NSOL | $ | -2% | -$1.00 | 253% |
IDT | IDTC | $ | -2% | -$0.63 | 40% |
PSINet | PSIX | $ | -3% | -$0.50 | 173% |
Yahoo! | YHOO | $ | -4% | -$4.78 | 71% |
Security | SFNB | $ | -5% | -$0.56 | 47% |
Network | NETA | $ | -5% | -$3.88 | 26% |
CyberCash | CYCH | $ | -6% | -$1.28 | 68% |
VocalTec | VOCLF | $ | -7% | -$1.50 | -9% |
Security | SDTI | $ | -8% | -$1.94 | -33% |
CheckFree | CKFR | $ | -8% | -$2.19 | -5% |
Secure | SCUR | $ | -8% | -$1.00 | -3% |
Open | OTEXF | $ | -8% | -$1.69 | 45% |
Concentric | CNCX | $ | -8% | -$2.00 | 155% |
Excite | XCIT | $ | -9% | -$6.28 | 122% |
PairGain | PAIR | $ | -10% | -$1.94 | -5% |
Versant | VSNT | $ | -10% | -$0.69 | -55% |
Verisign | VRSN | $ | -10% | -$4.13 | 162% |
Infoseek | SEEK | $ | -11% | -$3.88 | 207% |
CMG | CMGI | $ | -11% | -$10.63 | 195% |
Metricom | MCOM | $ | -11% | -$1.25 | 9% |
Broadvision | BVSN | $ | -11% | -$2.16 | 176% |
Sportsline | SPLN | $ | -11% | -$4.13 | 210% |
WavePhore | WAVO | $ | -11% | -$1.88 | 60% |
Cylink | CYLK | $ | -12% | -$1.81 | 35% |
Lycos | LCOS | $ | -12% | -$8.19 | 41% |
Earthlink | ELNK | $ | -12% | -$9.25 | 154% |
Mindspring | MSPG | $ | -12% | -$9.81 | 104% |
CKS | CKSG | $ | -13% | -$3.00 | 49% |
Egghead.com | EGGS | $ | -14% | -$1.63 | 51% |
CNET | CNWK | $ | -15% | -$5.72 | 11% |
CDnow | CDNW | $ | -15% | -$5.13 | 81% |
Doubleclick | DCLK | $ | -16% | -$6.94 | 119% |
Spyglass | SPYG | $ | -17% | -$2.19 | 116% |
Axent | AXNT | $ | -17% | -$5.59 | 53% |
Onsale | ONSL | $ | -21% | -$6.94 | 42% |
N2K | NTKI | $ | -24% | -$7.81 | 71% |
Open | OMKT | $ | -26% | -$6.63 | 95% |
CheckPoint | CHKPF | $ | -26% | -$11.13 | -23% |
USWeb | USWB | $ | -26% | -$9.63 | 189% |
TOTAL | 1,656.22 | -9% | -152.63 | 59% | |
SIMPLE AVERAGE | 33.12 | -9% | -3.05 | 59% |
A sleeper for much of this year and last, we see signs of life in NewsEdge
(NASDAQ:NEWZ), the company that resulted from a merger of Desktop Data and
Individual. It packages and sells content from a variety of sources into
the enterprise and Internet markets, serving more than 600 corporations.
While many Internet content firms hype the personalization goal, NewsEdge
has been doing this longer than most.
It also leads the market in revenue for 1997 far surpassing PointCast,
Dialog, and my this and my that. For 1998 we forecast NEWZ could post about
$90 million revenue although we estimate it won’t turn earnings positive on
an annual basis until next year.
Meanwhile, Cyberguard (NASDAQ:CYBG) came in as the second biggest gainer
since April 21 on persistent rumors that it may be an acquisition
candidate. Rumor or not, we think the entire security software sector
should band up to gorilla size growth soon before Microsoft (NASDAQ:MSFT)
puts all the pieces together for its own security server suite. And it will.
Comments made by Microsoft’s Steve Ballmer last week mentioned it was
taking aim at Check Point Software (NASDAQ:CHKPF), the leader in firewall
software. CHKPF’s stock free fell on the comment although CEO Deb Triant
said it works with Microsoft. Rule #1 in the software space: Wall Street
never bets against Bill Gates.
Amazon.com (NASDAQ:AMZN) found softness in its shares until a Monday and
Tuesday rally brought it back for a 3% gain since April 21. The Web
bookstore is beginning to branch out geographically and provide more
offerings. A $275 million debt offer it announced also will fill its war
chest. Playing the global space costs.
Netscape (NASDAQ:NSCP) seems to have found a few faithful who believe that
its Web site may be more than a convenient default after all. Making the
shift from software to media is not easy and we think Netscape may have to
bring some media talent into the fold to make it happen.
The e-commerce or e-tail stocks all lost between 13% to 24%. With the drop,
we expect “blue light specials” any day now on some of these, led back by
AMZN’s narrower than expected loss.
Even with the blip on the chart the past week, ISDEX is still up 59% year
to date.
However, people are often incorrect about what constitutes an Internet
stock. Beware third-tier stocks (none of which reside on the ISDEX) whose
main line of revenue has little to do with the Net. While we think genuine
Internet stocks have much more potential, third-tier stocks riding the
euphoria could sting more than interest rate rumors ever could.
