eMailbag: Sportsline, Microsoft, DoubleClick, Gore

First reader up this week writes: “Some time back you had indicated that
SPLN might be a sleeper and would do well in the future. Any more thoughts
on SPLN?”


Reply: At $14 per share, Sportsline (NASDAQ:SPLN) trades well of its
$39+ high and double its low of $7. Driving down SPLN: September 1
Sportsline filed a shelf registration to sell 1.8 million shares.


As you may recall, as we noted in ISR in the past, SPLN used options to
lure in the big names, sports stars such as Shaq, Tiger, Joe Nameth, and
even the big eye network–CBS. The dilution when/if all options get
exercised has always been our concern with SPLN.


Said another way, those options/warrants always loom as part of SPLN total
cap. Now they are getting some recognition which influences SPLN.


Sportsline is one of the Web’s most popular sports sites however, and has
deals with AOL and other sites to market and extend its reach. It also
announced a TV show for cable. Overall, we believe Sportsline must leverage
its stable of star athlete-option holders to participate more in the
enterprise to drive awareness and usage.


Start Me Up


“I read your comments on the top Internet stocks getting only 1/10th the
attention of Microsoft (ISR, Sept. 10). You are comparing apples to
oranges. The Internet-related companies you mentioned fall somewhere
between entertainment and fringe business needs, but they don’t provide
core operating systems and critical business applications like Microsoft
(or others) do. “Drawing users” to a Web site and providing users with OS,
server, and database technology are two incredibly separate things.”


Reply: Not today, but tomorrow, and very soon, Web sites may provide
operating system (OS)-like functions. Not OS in the pre-Web era, but OS in
the post-Web era. Finding, doing, buying, selling, communicating. Those are
the OS core functions of tomorrow. So the expression is not ‘where do you
want to go today’ but rather ‘where do you want to go tomorrow?’


CMG EPS


“CMGI reports earnings 9/17, according to Yahoo’s Research section–are
there any whispers going around that will help us prepare for the news?”


Reply: I think of CMG as a holding company/quasi-mutual fund/venture
capitalist, a one-stop investment spot for more than two dozen Internet
firms that it has stakes in, including a third or more of GeoCities
(NASDAQ:GCTY) and Lycos (NASDAQ:LCOS). So most of the action is off-balance
sheet in our view. CMG can sell stakes in any one of its firms and generate
EPS if that’s the objective. It also has a direct marketing side but that’s
not what Wall Street looks at with this firm in its valuation or prospects.


Gore?


“Would a Gore Administration be good or bad for Internet stocks?”


Reply:Gore has proven to be more aware of the Internet than just
about any other senior administration official (until the Starr Report was
released and now everyone in the Beltway is Internet-centric). For example,
in late 1993 he seemed to embrace the open platform information
infrastructure, a sort of muddled precursor to what has emerged as the
Internet.


If Gore makes it to the pilot’s seat he’ll need a platform. Technology and
e-commerce may be it. Gore could be good for Internet stocks if he
maintains the tax-free status of retail over the Internet, keeps the
Internet from the FCC’s grasp, and truly embraces it as the platform for
21st century commerce and communications.


Click Here


“Can you comment on the prospects for Internet advertising leader
DoubleClick, currently trading at $21/sh. and already off some 73% from its
high set less than 3 months ago? Is the market having a double take or is
this the time to buy?”


Reply: DoubleClick (NASDAQ:DCLK) may have gotten a little too
aggressive in a press release in June concerning its reach. While its
traffic and users are substantial comparing itself to a “portal” along the
lines of Yahoo!, it may have been a stretch for DoubleClick. In our view
it’s more of a loose and diverse advertising-delivering service provider,
not a central and branded content aggregator, so the type of reach differs.


DCLK ran on some of that euphoria and when the market’s flavor changed some
of that luster was lost.




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