Tom’s readers e-mailed him over the weekend with queries about Bid.com, theglobe.com and Sycamore Networks.
What’s your opinion on Bid.com?
And the troubles are likely to continue. Last week, the company announced
that its third quarter earnings would fall below analyst expectations.
The main reason is that the company is having difficultites in licensing
its technology and finding partnerships. Estimates were for the company to
have annual revenues of $50 million. But, it looks as if the company will
only hit $30 million.
The brutal fact is that the auction space is Darwinian. There are so many
other well-funded, cut-throat competitors in the industry — which should
continue to make Bid.com’s stock sickly.
Theglobe.com: It’s a Small World After All
Theglobe.com seems to be at a low valuation, especially after last week.
Is this a good time to buy?
Replay: It’s hard to believe that theglobe.com (TGLO)
was the biggest IPO ever (605 percent on its first day of trading). Now, the
stock is trading at 11-1/16 and a $293 million market capitalization. It’s
kind of like the Internet “walking dead.”
Last week, theglobe.com warned Wall Street that its third-quarter earnings
will fall below analysts’ prediction for sales growth. Consequently, the
stock plunged 18 percent on Friday.
Such an announcement is definitely odd, given the fact that many other Net
companies seem poised to post strong surges in the upcoming earnings
Also troubling was the announcement that the company had delays in two
major products: globelists.com (network of e-mail user clubs) and uPublish
(a home page builder).
But the biggest danger sign? Bear Stearns lowered its rating on the
company from “attractive” to “neutral.” It was Bear Stearns that took
Bear Stearns has concerns that theglobe.com’s new products will have
problems making any money. Actually, it looks as if this is the case with
much of the products of theglobe.com.
For example, in the latest quarter, theglobe.com had sales of $4.1 million
and losses of $6.7 million. To finance the burn rate, the company will need
to access external capital. Unfortunately, with a stock price so low, this
will be a difficult task.
Sycamore Networks: This Week’s Blockbuster IPO?
The Net stocks got whacked last week. Will this hurt IPOs for the upcoming
week? How will Sycamore Networks do?
Reply: This company is likely to do well regardless of market
conditions this week. Wall Street has an insatiable appetite for
infrastructure companies, such as Foundry Networks and Juniper Networks.
Sycamore Networks should do the same. In a nutshell, Sycamore develops
products that transport voice and data across fiber networks. The
products go by the phrase of “intelligent optical networking products.” In
the traditional model, the process of routing data traffic is fairly
inefficient. As for Sycamore, its solution streamlines the process — yet
does not require much capital equipment improvements.
Who are the customers? Well they include the big-boys, such as foreign
telephone companies, cable operators, ISPs, long distance carriers and so
on. Although, the company has only one customer: Williams
But the customer list should start to increase.
All in all, expect this IPO to be red hot.
Here are the valuation metrics:
pro forma IPO
IPO market cap
less working cap
ALL NEW! internet.com’s HotWatch a monthly e-mail subscription for $99,
featuring Internet Stock Report’s top 10 noteworthy Internet stocks for the
month. Each month you will receive in-depth analysis on the top 10 Internet
stocks to watch with the information you need to assess the fast-paced nature
of Internet stocks. Staying on top of market changes in the Internet Stock
market is what counts. For $99 per year, you receive 12 timely issues sent to
you by e-mail. Don’t wait, our next issue will be out before you know it with a
perspective on the market. Sign up today at: e-newsletters