eMailbag: StarMedia, Amazon, AOL, Marimba, Bottom?

First reader up writes: “Steve, what do you think of StarMedia?”

Reply: StarMedia’s IPO struggled a little when it debuted last week with about a 30% rise the first day. That was owed to a
market glut that watered down On the second day of trading however it popped so that StarMedia
(NASDAQ:STRM – news) was up more than 300% since IPO.

Is this a $3 billion company? If it can become the “Yahoo of Latin America” then I see some value in STRM’s franchise. The
weak point to me looks like the concentrated online usage in Latin America, among the 20% of homes that can afford it. In the
U.S. and parts of Europe Internet usage has more than 30% household penetration.

But overall I see STRM as part of someone else’s portfolio, that someone else being a larger media company.

Bottom Up?

“Steve, are we at the bottom of the market for Internet stocks?”

Reply: We are off substantially from highs. ISDEX was at 696 earlier this year and down more than 150 points since then. I
think that the huge runs that came early in 1999 were a little early for the sector and set up this huge correction as well as the
IPO rush.

I think we’re still in a volatile market that may cause some IPOs to examine their motives a little closer. Good companies can
always go public, it just gets harder to be heard above the noise.

Regarding the bottom of the market I think we’re at a healthier pace now for sustainable valuations. The percents I see make
sense vs. sheer frenzy.

Fortune article

“Steve, I saw you mentioned in Fortune (June 1999). Finally, the genius of Steve Harmon realized!”

Reply: I’m trying to make the Internet a better place for investors with analysis, tools, strategies, etc. It’s been a 5-year quest
but there’s a long way to go. Thanks for the feedback.

Business 2 Biz

“So many of the stocks in the Internet seem to be consumer stocks. What are your thoughts on business-to-business stocks?”

Reply: Consumer stocks always get the spotlight since many Internet users would consider themselves “consumers.” Even
those at work may classify themselves this way and gravitate to the consumer brands for work-related offerings.

That’s why,, all figure prominently in work usage patterns. Yet I foresee a tidal wave of
B2B stocks coming. I think Marimba (NASDAQ:MRBA – news) was one and that BackWeb may be another.

VerticalNet (NASDAQ:VERT – news) ran on B2B and still holds some interest because of its focus on vertical portals for
industry. Overall I think IBM (NYSE:IBM – news) and AT&T (NYSE:T – news) provide deep B2B exposure. IBM’s chief
Lou Gerstner just said about a third of revenue comes from selling Internet products.

Microsoft is another. Intel. The big stocks are moving into the Internet (or rather the Internet is taking over their businesses).

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