The new Internet leaders have emerged – and they’re the same as the old ones.
eBay, Yahooand Amazon.comhit new 52-week highs together on Tuesday for perhaps the first time since 1999.
The three Internet giants are executing where former competitors have fallen by the wayside – and are no doubt benefiting from the demise of much of that competition. They have built solid Brands with a capital ‘B’ – one of the hardest things to do in business. They have streamlined costs, pursued new revenue opportunities and appear poised to produce profits.
The problem is, after 300% or greater gains off their lows, they’re now priced like the Great Nasdaq Bear Market never happened. eBay trades at 97 times earnings – but as the fastest-growing of the three, it’s probably the most reasonably valued. It bottomed in late 2000 and has never looked back.
Yahoo trades at an even loftier price-to-earnings ratio of 113, and Amazon has no PE ratio because it had a trailing loss. At three times sales, Amazon trades far above the one times sales that retail stocks usually command, including Wal-Mart, the company Amazon aspired to emulate.
It’s been a great ride, but don’t forget where the ‘sell’ button is.
The market sagged Tuesday on terrorist attacks in Saudi Arabia, a wider than expected trade deficit, and disappointing results from Wal-Mart.
The Nasdaq slipped 1 to 1539, the S&P 500 declined 2 to 942, and the Dow lost 47 to 8679. Volume rose to 1.38 billion shares on the NYSE, and 1.86 billion on the Nasdaq. Decliners led by a few issues on the NYSE, while advancers led 16-15 on the Nasdaq. Downside volume was 52% on the NYSE, and 39% on the Nasdaq. New highs-new lows were 206-7 on the NYSE, and 189-6 on the Nasdaq.
After the close, Applied Materialsand Network Appliancedeclined on results that weren’t as strong as investors had hoped. Computer Sciencesand Sycamorealso reported in-line results.
During the day, Avanexsoared 146% on news that it plans to acquire optical component assets from Corningand Alcatelon favorable terms.
IBMclimbed 1% to a new 52-week high after launching a new mainframe. Big Blue is the first Dow stock to hit a new 52-week high since Eastman Kodakand 3Mbroke out only to be sold off. IBM is now right at a big gap down from April 2002; see the Technical Analysis at InternetStockReport.com.
Dellhit another 52-week high ahead of its earnings report on Thursday.
The IPO of iPaymentgave back 3%. The first Internet IPO of the year was dogged by an analyst controversy on the new and improved Wall Street.
Register.comrose 1.7% after beating estimates. eSpeedand CNTfell 8-10% after coming in light on revenues.
AMDrose 1% after unveiling a new processor.
Broadcomrose 2.5% on a positive analyst meeting.
Verizonslipped 0.3% on a bold push into WiFi.
Gatewaylost ground despite winning a Grid computing customer.
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