First reader up this week writes:
“What’s your spin on the downturn Friday for Internet stocks and the
market?”
Reply: The market got ahead of itself with hype riding hype so a
much-needed correction hit and took some of the froth off. We also saw a
flight to quality as investors who put off the earnings ratio suddenly got
earnings conscious. So you saw stocks with positive EPS suddenly spike up
amid the turmoil.
I expect choppy waters for the next few weeks and
something like GeoCities’ IPO to perhaps reignite the sector and open a new
window for community firms to go public.
Broadly Speaking
“Broadcast.com’s IPO sent a shockwave and surprised many with its
279% gain on the first day. Why, why, why did this unknown stock soar?”
Reply: Market leader and category killer attributes lent itself to
Broadcast.com (NASDAQ:BCST) aftermarket lift off. Friday’s close of $61.50
gave BCST about $1 billion market cap. I like Broadcast’s model of
aggregation but I wonder about the threat of the broadcasters themselves over
time. To be fair, consider that a major metro TV station fetches
more than $1 billion. Broadcast.com is trying to aggregate the world’s
cast. Still, I prefer RealNetworks (NASDAQ:RNWK) with it 26 million users
to leverage into networks.
GeoCities On Earth?
“When will GeoCities go public?”
Reply: The actual date is based on market conditions. Underwriter is
Goldman Sachs (www.gs.com) so they should know soon enough. We also suggest
looking at Ipomaven.com. Yahoo! IPO news carries some items, too.
Top 10!
“Your top 10 stocks to watch are up nearly 200% year to date. What
are your picks for the next six months?”
Reply: We still have faith in the 10 to watch. As the market shifts
we see some potential in other “underfollowed” stocks in the group. It’s a
widely-held falsehood that all Internet stocks are soaring simply because
they are dubbed Internet stocks.
Oddly enough, the ones dubbed “Internet” go through the roof while the ones
that go about their business in real business-like fashion just sit there.
Look for a report soon on these sleepers that may awaken in the land of
giants. Said another way, they might be giants.
Egghead Shines
“Do you have any statistics on the month-by-month revenues of EGGS since it
went 100% online. It seems that the move was a “brilliant” one by a
struggling company that might have gone under in just a matter of months.
Since I have made several purchases from them with overall a high level of
satisfaction, I can say that they are my preferred site for computer
equipment over about 5 others. I’ve only complained about their
unreasonable shipping charges.
With all of the fire involving IPO’s, perhaps one could do a little research
on an established company that make a full switch to the Internet to see the
current and project differences.”
Reply: We have and we did. For the past six months we’ve touted
Egghead’s (NASDAQ:EGGS) move to being a Web-based firm. Few believed until
a few weeks back when EGGS took off and more than tripled in that period to
as high $29.125 per share. See Internet
Stock Report, June 4, for one of those analyses.
