eMailbag: Top 10 Watch, Prodigy, Security First Changes

First reader up this week writes:

“Steve, I just stumbled upon your top ten stock picks for 1998 and the
numbers are definitely impressive. Do you pick stocks on a more frequent
basis (weekly?). When will your list for 1999 come out and where do I go to
see any of your picks?”

Reply: The top 10 to watch for 1998, which was up more than 127% (see
September 30
) were selected December 31, 1997. The top 10 to
watch for 1999 will be chosen December 31, 1998, and every quarter we check
in on the group.

More ebay

“I am confused by your mention of Ebay stock. (Morning Report Wed. Sept.
30). You said, “To win it must make the service and process superior to
rival efforts, worth the percentage hit on sales and fee.” Personally, as a
user of their service, I feel they’ve done this. Knowing the seller pays
for the service, makes the buyer know he better pay for the item.

That and a HUGE user base (unlike Yahoo! where there are plenty of items
but only about 1% have buyers and the buyers rarely pay, my own experience
of course) dwarf any attempt at competition. The fact is, Yahoo can’t make
any money on its auctions if it doesn’t start charging. They’ll find that
people will stop visiting when they notice things not selling, and without
the hits, there won’t be any advertisers.

E-bay has a system for reporting bad buyers and sellers; on Yahoo you only
get to place or take away smiley faces, there’s no area for comments, and
very little Customer Service for users. Sure, Yahoo has sellers, but they
won’t get any money from them. E-bay has 100x the sellers, they get money
from them, and the sellers (and buyers) are making money and having fun!”

Reply: We’re a fan of ebay (NASDAQ:EBAY) for what it’s done, the
innovation and success of personal auctions. But we also see a potential
marketing war ahead that could hurt margins, the same way Onsale
(NASDAQ:ONSL), a different type of auction service, posted positive
earnings and then slid into losses as it realized the game wasn’t over but
just beginning.

Security First Bank to SONE

“My favorite company, by far, on the ISDEX has just completed a major
reorganization and has changed ticker symbols. Security First Network Bank
(SFNB), the Web’s First Internet Bank has reorganized into a new
software services/holding company called Security First Technologies and
changed the symbol to “SONE” (pronounced S-1).”

Reply:Well aware of the switch and have already made the change in
ISDEX. Security First’s software-only focus is a great move in our opinion
since major banks can now look to it as a solution rather than banking
competitor. We expect all major banks to have more than 10% of their
customers using the Web for banking soon. Eventually, it may be more common
an interface than an ATM machine with usage surpassing 30%.

Internet Funds?

“Steve: Is there a fund for Internet Stocks that you are aware of?”

Reply: There are a few funds that call themselves “Internet” funds
but we consider them too heavy in PC stocks to mention by name. Nothing is
as close as ISDEX. E-mail Fidelity or Vanguard, let them know if you want
an ISDEX mutual fund. We may be interested. We have hundreds of readers who
want this.

Prodigy IPO

“Hi Steve, do you know the exact date when Prodigy is going to go public
and its ticker symbol?”

Reply: See our report on
Prodigy’s IPO plans
. Planned ticker symbol: PRGY, IPO date not
determined yet. Prodigy may have the chance to go public even in a bull in
a china shop market. But we don’t expect it to be in the value per
subscriber level of Earthlink (NASDAQ:ELNK) or Mindspring (NASDAQ:MSPG)
right away and could see it debuting between $500 to $750 per subscriber or
anywhere from about $325 million to $450 million.

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