Surprise! Wall Street Looks For Non-Brands For Once

All year long there’s been a lovefest for big brands, big bucks and the get
big fast Internet firms. You know the names. Our latest tally of ISDEX ups
and downs for the past week shows some of the “smallbies” bobbing at the
top for a change. Quite simply, as the big brands keep rising we think it’s
getting harder to find value (or justify valuations!).


“Buy small” may
be the new mantra as investors start to see growth in revenue and
users/customers in emerging Internet firms: ad-network 24/7 (NASDAQ:TFSM),
software e tailer Beyond.com (NASDAQ:BYND), ad-network leader DoubleClick
(NASADQ:DCLK), Web-hosting provider Exodus (NASDAQ:EXDS) and renewed
interest in IP communications pioneer/leader Vocaltec (NASDAQ:VOCLF).


It’s notable that flavors of the week in recent weeks seem to have stalled:
Amazon.com (NASDAQ:AMZN), eBay (NASDAQ:EBAY), Broadcom (NASDAQ:BRCM),
and Inktomi (NASDAQ:INKT).


As Christmas approaches and Internet users who are eager
to avoid the crowds point and click their way to instant Santa Claus-dom,
we’ll be keeping a closer eye on anything that enables the magic of
couch-potato shopping, such as e-tail stocks like AMZN, and CDnow
(NASDAQ:CDNW).









































































































































































































































































































































































ISDEX (

03-Nov-98

% change

The Internet Stock Index

close

from

27-Oct-98

ISDEX

171.24

6.5%

NASDAQ

1,788.43

4.1%

DJIA

8,706.15

4.1%

24/7
Media*

TFSM

$17.38

74%

Beyond.com

BYND

$11.00

52%

Doubleclick

DCLK

$34.38

37%

Network
Solutions

NSOL

$64.88

31%

Open
Market

OMKT

$7.88

29%

VocalTec

VOCLF

$8.63

25%

Exodus*

EXDS

$32.44

24%

ISS
Group*

ISSX

$31.44

17%

CKS
Group

CKSG

$22.00

16%

Egghead.com

EGGS

$8.25

16%

Yahoo!

YHOO

$142.13

15%

Spyglass

SPYG

$14.88

14%

Security
Dynamics

SDTI

$11.50

14%

USWeb

USWB

$16.63

13%

Network
Associates

NETA

$43.94

12%

Earthlink
Network

ELNK

$43.25

11%

Broadcast.com*

BCST

$50.00

11%

CMG
Info

CMGI

$60.00

9%

Open
Text

OTEXF

$13.50

9%

Lycos

LCOS

$41.50

9%

America
Online

AOL

$132.50

9%

Amazon.Com

AMZN

$126.06

8%

E*TRADE

EGRP

$18.88

6%

Broadcom*

BRCM

$81.81

5%

Broadvision

BVSN

$17.50

5%

IDT
Corp

IDTC

$17.38

5%

Security
First Technologies

SONE

$18.00

4%

Cisco

CSCO

$63.38

4%

GeoCities*

GCTY

$34.25

4%

Verisign*

VRSN

$31.00

3%

CyberCash

CYCH

$8.47

3%

N2K

NTKI

$5.81

2%

CheckPoint
Software

CHKPF

$23.75

2%

eBay*

EBAY

$84.00

2%

Axent

AXNT

$23.75

2%

Concentric

CNCX

$24.88

2%

Mecklermedia

MECK

$28.44

1%

Excite

XCIT

$38.13

1%

RealNetworks

RNWK

$37.00

1%

Sportsline
USA

SPLN

$15.50

1%

CDnow

CDNW

$8.25

1%

PSINet

PSIX

$14.75

0%

Inktomi*

INKT

$83.31

0%

Netscape

NSCP

$23.63

-1%

Mindspring

MSPG

$38.88

-3%

Infoseek

SEEK

$29.63

-5%

CNET

CNWK

$39.63

-6%

@Home
Network

ATHM

$43.00

-7%

Onsale

ONSL

$16.00

-20%

Verio*

VRIO

$14.25

-21%

*
change from IPO 1998

(c) 1998 Mecklermedia, Internet.com




Among the more notable news behind the moves:



  • 98.10.28 – Amazon.com (NASDAQ:AMZN) posts $153.7 million
    third-quarter revenue, up an amazing 306% vs. 3Q97. On a GAAP basis, 3Q98
    net loss is $0.90 per share, including $20.5 million of merger- and
    acquisition-related costs (shop comparison engine Junglee, Movie Database
    and some smaller book sites in Europe). Cumulative customer accounts climb
    to 4.5 million as of September 30, up 377% vs. a year ago.


    Repeat orders = 64%, again a strong sign of Amazon’s “stickiness” with
    customers. In short, Amazon looks like it may be on its way to becoming the
    Web’s most powerful retailer bar none. The real challenge is creating the
    infrastructure to enable it. It’s probably 20% there by our reckoning, (books
    and music are two of more than 100 categories it needs to capture to be a
    truly deep retail experience). A lot can go wrong in the 80% to go. If
    successful, however, Amazon could be one of the Web’s all-time wow stories.
    So far so good.


  • 98.10.28 – Microsoft (NASDAQ:MSFT) MSN Web service lands the
    largest advertising commitment on the Web ever with a $90 million ad
    agreement from First USA, a credit card lender. Term is for five years.


  • 98.10.29 – Infoseek (NASDAQ:SEEK) reports record third-quarter
    revenue, up 129% to $19.2 million vs. 3Q97. Net loss surprisingly tame at
    $2.6 million or $0.08 loss per share. Results include $1.4 million
    merger-related costs associated with the pending Disney-Starwave-Infoseek
    combination. Pro forma the agreement, Disney will own 43% of SEEK with
    options to acquire as much as 50.1% at a price no higher than $50 per share.
    The result of the team up will be evident in the soon-to-debut GO.com,
    which by combining Infoseek and Disney.com/ESPN/ABC.com will instantly become
    the third most visited site on the Web behind Yahoo and AOL, according to
    stats from audience measurement outfit RelevantKnowledge.


  • 98.10.30 – Beyond.com (NASDAQ:BYND) gains 16% to $9.25 per share in
    a doppler effect following its strong third-quarter results announced
    October 21. Beyond’s 3Q revenues reach $9.7 million, up 102% vs. 3Q97 while
    loss for 3Q98 is $8.9 million. Beyond sells software via the Internet.


  • 98.11.02 – Yahoo (NASDAQ:YHOO) hits a new all-time high and ends
    the day up 11% to $145.4375 per share. We attribute it more to investors
    going with the market leader than any one news item today. The deal
    announced with Dow Jones for a job search, for example, isn’t front
    page stuff in our opinion and not the caliber of deal to prompt an all-time
    high.


    As we said earlier, we think Yahoo holds an enviable
    category leader status.


  • 98.11.02 – Network Solutions (NASDAQ:NSOL) continues to get strong
    interest, up 16% to $62 per share today. Late last week it launched
    WorldNIC Japan with ASCII in Japan. Ironically, Prudential downgraded NSOL
    last week. NSOL is one of my top 10 to watch for 1998 and my belief is
    simply this: as the default registrar, even with competition coming,
    Network Solutions has a substantial lead over any possible challenger.


  • 98.11.03 – Versant (NASDAQ:VSNT), whom we’ve long admired but since
    retired on our radar, announces a patent for cover the selection of items to
    be replaced in a cache when the cache has no free space. While we’re not
    clear on what implications this has yet, we consider object-oriented data
    manipulation paramount to the Web’s future. Unfortunately, Versant revenues
    dropped dramatically to $5.9 million 3Q98 vs. $9.4 million 3Q97 and it may
    take more than a patent to bring revenues up to historical levels. We think
    heavy competition in objects has taken its toll on VSNT the stock and
    Vesant the firm.



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