eMailbag Monday: Can Inktomi Buck the IPO Bear Market?

Ever since we profiled the planned initial public offering of Internet
software maker Inktomi, dozens of readers have asked us to alert them about
when and if it goes. The latest buzz has Inktomi scheduled to price Monday,
June 8, and start trading Tuesday.

The IPO comes at a time when the Internet Stock Index (ISDEX), the market’s
clear leader in how Net stocks perform, is down more than 40% since Inktomi
first filed its intentions.

We think that could cost Inktomi a little on its pricing and shares
offered. Even so, if the market picks up in a few months it can always do a
follow-on offer to make up for any cash left on the bear’s table today.
Check out our analysis on Inktomi in the Archive, Morning Report, April 21.

And now for emailbag Monday.

The first reader up this week poses this question:

“Can you give us an idea what you think may happen with the federal
decision coming out on domain names. Will competition force NSOL down?”

Reply: As you saw Friday, Network Solutions (NASDAQ:NSOL) soared 21%
to $39.25 per share after a White House recommendation regarding domain
name policy favored a slower changing of the guard. We think NSOL could
hold onto a substantial market share despite competition. Profit takers may
have a few points here on that kind of jump.

Searching For Answers

“What do you think I should invest in SEEK for a long term? Do you think it
will gain it back to 48 dollars?”

Reply: Infoseek (NASDAQ:SEEK) currently has about $700 million
market capitalization or $22.75 per share price. Last time we did an
analysis we thought SEEK could be a $29 stock, and that was just before it
skyrocketed to north of $45. Long term we believe any one of the navigation
sites has a chance at doing insanely great things.

For Infoseek, however, we’re asking one perplexing question: What exactly
does its slogan “once you know, you know” mean? It tells us nothing about
the firm or what it does.

View From Here

“I was wondering if you could give an opinion on a company called Intervu
(NASDAQ:ITVU) that does “rich media” Internet advertising. I would like a
short term and long term view on the stock.”

Reply: InterVU makes a neat product that lets advertisers put video
in ad banners. Total revenues for the three months ended March 31, 1998 was
$113,000. As I said, neat product . . .

Thunder Down Under

“Do you think OZEMY has the potential to be the portal of choice in
Australia? If yes, how would you value it in reference to AOL which is a
portal & online link as is OZEMY?”

Reply: We’ve always liked OzEmail (NASDAQ:OZEMY) which trades at
just over 3x revenue, according to our analysis, while U.S. peer Earthlink
Network (NASDAQ:ELNK) trades at we what think may be 6x. And OzEmail is the
leading Web/online service in Australia, one of the most wired nations on
the globe.

Going Down?

“What about Yahoo! (YHOO): From 129 to 104 in a few days. I bought at 99
and probably I won’t sell, but I’m disorientated by all these up and downs.
What’s your opinion?”

Reply: Yahoo! has a lot of potential. But we think it’s the first
few minutes of a long match ahead. Just as in the beginning of the PC era
there were early leaders that many expected to be perpetual leaders, some
made it and others did not. So far Yahoo! has made some great moves.

Concerns for us: Unsold ad inventory and the ability to deliver commerce
promises (which are based on delivering viewers).

That concern goes across all of the Web navigation sites that sold the
future. If they deliver the “viewers” then that’ll be proof of great
expectations. Right now they are all in the proving ground stage. Yahoo!
could be the Disney of the Internet space. Or it could be the TBS. Relative
to the past, it’s done more than fantastic; relative to the future, let’s
stay tuned.

Coming this week in Internet Stock Report: A special
report on ISPs, IPOs and a few more acronyms. Spread the word.

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