First reader up writes:
“Your comments on Alan Greenspan discovering the “I” were right on target
(see ISR January 29 in Archives). Hey,
maybe he should be delivered his own personal copy of your report everyday.
Sincerely, High School Computer Teacher
p.s. Bought YHOO on IPO, thanks to you.”
Reply: It’s no small thing that we believe the next 100 years to
be the “information age” just as the last 100 were the “industrial age.”
Greenspan couched his remarks both pro and con about the Internet and also
likened some of the stocks to a “lottery” mentality. We don’t think all
Internet stocks will be winners no more than all industrial stocks were
winners.
However, BusinessWeek called the next century the
‘Atlantic’ century (Europe and North America). We disagree. The next
century is borderless and global ecommerce, not geographic economics. Glad
to see you made a few dollars on YHOO.
ISDEX Newbies
“Are you going to add more Internet related stocks into your Internet Stock
Index soon? For example, I’m looking forward to
see XMCM, ABOV, TGLO, MKTW…etc. recent Internet IPOs there. I really
like that Web page with all the Internet stock listings, it
really helps to see the overall picture of this Internet sector.”
Reply: ISDEX is reviewed every quarter for additions and
deletions. For new IPOs we occasionally add one to the lineup if it
reflects a new segment or meets the criteria for ISDEX. Simply put, a
company must derive majority or 100% of its revenue from the Internet and
be representative of the sector it’s in. ISDEX is an industry index that
covers the gamut of the Internet on Wall Street including e-commerce,
access, software, hardware, services, security, e-tail, and high-speed.
Sands Of Time
“It seems the emphasis is always number of Internet users or number of
unique Internet users. I’ve been wondering if the time spent at a site
enters into the value equation. Two things, probably unrelated but they
got me thinking:
1) I saw a note on a message board about a lady who lost her free Web
site due to exceeding her bandwidth. The company told her she had 57,000
hits to her site. She couldn’t believe it as she is “nobody.” As it turns
out, she spends a lot of time in the (un-named) chat rooms and apparently
every 10 seconds there is a refresh that has to get her thumbnail picture
from her Web site. I don’t know if this is multiplied by each person
chatting who needs to see her picture or what. Anyway, “hits” can sure be
misleading.
2) I’ve been wondering, if someone stays at a site for a long time, if the
fact that they see many more banner ads and are perhaps a more “loyal” user
than average, has any effect on a users value (company value).
I saw a report that said eBay is number two in total user minutes at 600
million something and Yahoo! is number one at 1.6 billion minutes.”
Reply: Raw time on a site is valuable if (at least from a
business perspective) the site can extract value from the user. That can
come in the form of ad views, commerce, or marketing muscle extended by the
user. However, time alone cannot gauge the overall efficiency of the user
experience.
Several sites may deliver fewer page views but higher bang
for the buck. eBay (NASDAQ:EBAY) is one example. Its users are not chatting
about romance (as they do on AOL), grabbing free stock quotes (as they do
on Yahoo), making free Web pages (as they do on GeoCities).
eBay’s users
engage in commerce almost if not entirely 100%.
That’s why EBAY shares
have soared. While we think EBAY stock may be ahead of itself — and its
ton of options could dilute it — still offers the closest thing to my
‘Zero Gravity’ economic model: pure digital enterprise without any of the
overhead.
When To Sell?
“What is your best guess as to what Allaire stock will do over the next 30
days? I bought 100 shares pre-IPO (my first, ahem,
trade) at $20/share. It closed Friday at $51. I want to hold before I sell
to recover investment until Feb. 5 to avoid Schwab penalty for
flipping.
But I don’t want to be able to unload for less than $40. Seems
most Internet IPOs are at or above their offering price year to date, in
most cases double or more for the most recent.
Reply: We don’t give individual advice. What you do with Allaire
depends on your tolerance for risk and reward and ability to sleep at night.
Taps
“Do you still feel a correction is on tap for the Internet group in the
near future?”
Reply: Certain stocks in the Internet may do well and others may
not. We believe the Internet should be analyzed on an individual company
basis, that winners and losers emerge in this industry everyday. A
correction came in early January and Internet stocks popped back up. This
pattern has gone on for two years now, but especially the past 12 months.
One person’s correction is another’s buying opportunity.
At the center of
your question seems to be ‘are Internet stocks overvalued?’ A core group
probably is not but the ones on the fringe — those firms who carpet-bomb
the PR newswire with press releases saying how they plan on upgrading their
Web sites and are, therefore, now ‘Internet stocks’ are in for a rude
awakening we think. We are also at a loss as to why anyone would buy Zapata
shares after its first attempt at being a Internet company. Prove it first
and then Wall Street will see it to believe it.
Reply: Our opinion: Isleuth runs on the border of the many search Harmon’s Hotwatch ’99 – the 10 stocks to watch in the first subscriber issue comes Feb 3 – click here for details –
“What do you think about Isleuth.com, search engine now traded on OTC BB?
How can I know more information about it?
From Bologna Italy
sites out there. We don’t believe it yet has the ingredients and
presentation of a first-class search site along the vein of Yahoo, Excite,
Lycos, or Infoseek. Isleuth has a lot of good info and links on its site
but the navigation is cluttered. A lot of stocks on the fringe climb on
endless hype but the proof is in the balance sheet. SLEU plans to be a
full-reporting company but we remain prudently reserved of it until we see
the numbers. Our hunch is there’s not much revenue yet. We’ll see. Ciao.
the Internet
space – last year’s watch group was up more than 300%
