eMailbag Monday: Readers Ask About Commerce, CDNow, Connect

First reader up this week writes:

“With Internet-based commerce growing, myself adding to the phenomenon,
I’ve considered package shipping companies such as Airborne Freight and
Federal Express to benefit tremendously from the trend. What are your
thoughts of the secondary beneficiaries of e-commerce?”

Reply: We need only look as far as the recent U.S. Postal strike to
see how reliant the bevy of shipping firms are for commerce in general. In
particular, though, the introduction of the Internet and its spawning of
“virtual enterprises” (Amazon is an example) brings to the fore the value
of express delivery services.

Said another way, FedEx or any shipper used is an integral part of Internet
commerce. It relies on these firms for fulfillment in the absence of
storerooms, showrooms, and stores. As such, we would expect a dramatic jump
in shipment via these carriers as Internet commerce accelerates.

When See IPO?

“Congrats on having such an informative, entertaining service. I have
bought several CDs through CDnow. I like the company’s site and service. I
that it will be going public soon. Do you have any details about

“How do you think it would fare in competition with NTKI? N2K gets
good plugs through AOL and MTV, but CDnow is also well known and has its
share of alliances. I suspect that its balance sheet might also be better
than that of N2K, but at this point I can’t get enough info on either
company to confirm that.”

Reply: CDNow’s initial public offering is cued up, and we’ll play our
analysis right here in Internet Stock Report soon.


“I have put a lot of money in buying FTP Software (FTPS) shares because I
believed in the Vitual IP (VIP) strategy, but FTP share falls day after day
and is currently traded below its book value. Do you think that FTP
Software still has a future with the expansion of the intranet and the
Web-to-host concept along with the booming of e-business? What do you think
about the VIP strategy? Shall I sell the shares or hold them?”

Reply: FTP Software’s (NASDAQ:FTPS) strategy seems partly to aim at
the virtual IP market, one that could blossom. Yet strategy and
implementation are two different things in our book. The market may grow
and FTP may not, or vice versa. We’re waiting for FTP’s revenue to grow in
line with some of the other hot stocks. As for giving you specific market
advice on buying, selling, or holding, we don’t. See the Disclaimer below.
The purpose is to get you to know the industry, know your companies, know
their customers. It’s your money.


“You covered Broadvision. What about Connect? I have been doing some
homework on this company. It has been making some very good moves
for a small player. Maybe the surprise from the group in the near
future. What do you think?”

Reply: In our view Connect (NASDAQ:CNKT) hasn’t connected yet with
its market or Wall Street. Evidence comes via its low sales as we outlined
in ISR
Jan. 22


“Wow, a whole lot of food for thought (ISR Jan.
). You seem (although I could be wrong about your implications) to be
implying that the value of the browser is declining. However, it
represents the base portal to the client (the other primary portal
being the server).

“Market share is only important in that it allows Netscape or Microsoft to
control the standards to this portal. What they do with that control is
then most important. Apply the OS model to browsers.

“How can Netscape use its control of the browser standard to its
advantage? Are there add-on apps (like Word, Excel) that will rest on top
of the browser? If not, then the value is in the control of the interface,
as you suggested.”

Reply: Browser functionality, in our view, has been replaced in
large degree with Web sites and hyperlinks, especially from the navigation
networks. Browsers frame the Web, but we think over time they will be more
in line with “viewers” than hyper-icons that “drive” the user.

In that sense viewers manipulate the Web content and present it in various
ways the
user wants, while the actual movement through the Web could very well be
done off of the navigation networks entirely.

You can already do most of your Web use on a few key sites and use those
sites to take you elsewhere. The browser should give users more format
options for content and how its displayed, printed, sent, or received. For
17 million people a month Yahoo!
(NASDAQ:YHOO) is effectively their browser.

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