Under The Looking Glass: Top 10 Watch List Up 152% YTD

Let’s take a look at our latest thinking for this group:

  • @Home (NASDAQ:ATHM), the pioneer in cable Internet services. Deals
    with all the leading cable operators through an early smart alliance and
    investment from TCI, nation’s largest cable operator (and John
    Malone’s Hi-Ho Silver horse). Malone was the interactive TV cowboy who got
    thrown from his horse in 1995, when that paradigm shift never happened.
    Internet did. Through @Home, TCI gets to get back on the horse and can try

    @Home passes more than 10 million homes although we are a bit
    worried only a few hundred thousand have signed up. Over time, if cable
    Internet takes off, AOL is now waking up to the fact that @Home could make
    business very difficult for AOL and any Internet content firm or service as
    @Home could charge toll fees to be carried on its service (the cable

    The big picture: AT&T has agreed to acquire TCI, which puts TCI’s
    stake in @Home in the hands of AT&T. Under terms of the merger approval by
    the government, AOL and others have asked the FCC to consider requiring
    @Home to open the cable lines to others. AT&T says a deal can be made among
    industry, the FCC doesn’t need to dabble here.

    Either way, we think @Home
    is wired into the center of cable Internet. Its real challenge may be to
    convince consumers that it’s not as anathema to consumers as the cable
    firms have been for 25 years, with the poor customer service cable companies
    have offered all these years.

  • Concentric Network (NASDAQ:CNCX). Our view hasn’t changed in that
    corporations want to leverage the Internet infrastructure with the security
    aspects of a private network. Concentric, an ISP, offers “virtual private
    networks” to companies. This is one reason we put it on the watchlist last
    31, 1997. Concentric’s focus on Web hosting and other corporate value-added
    services also gets our attention. November 2, it launched The Web Developer
    Network, adding to its hosting offerings.

  • Earthlink (NASDAQ:ELNK) tops our list of consumer-oriented ISPs to
    watch as we outlined 12/31/97. The Sprint investment earlier this year
    included Sprint feeding Earthlink new subs every year, and Earthlink’s more
    than 600-person customer support team, has put ELNK on the radar. But
    lately we’ve heard some complaints that certain POPs (points of presence)
    are busy when consumers try to dial up. This is the same problem that
    happened with

    Maybe it’s time to up the user-to-modem port ratio or see why there
    are busy signals at times. Nothing like a busy signal to change the winds
    as AOL found out, but it has recovered and moved on. Earthlink is much
    smaller in
    user base, about 1 million to AOL’s 13 million. That said, a busy signal is
    a busy signal and should never happen. How would you react if you tried to
    turn on the TV and a message said: too many people are watching, try again?

  • Infoseek (NASDAQ:SEEK) gets closer to revealing what it and the
    Mouseketeers at Disney (NYSE:DIS) have been up to pending Disney’s $430
    million offer for 43% of SEEK. Go.com is the name and it awaits the green
    light later this year. At the time we put SEEK on our watchlist last
    December, our reasoning was relative valuation to the search peer group.
    SEEK flirted with north of $45 just before Disney’s offer was announced.

  • Network Solutions (NASDAQ:NSOL) keeps getting the naysayers believing
    that impending competition will change its outlook. We still think that
    Network Solutions as default registrar with a service in place holds an
    edge. It also just announced a Japanese service. Being first and
    capitalized matters on the Internet. These are two things Network Solution
    has in
    our opinion.

  • ONSALE (NASDAQ:ONSL), until eBay came along we thought ONSALE had
    the best commerce model on the Web. It still has a good one in our view and
    nothing explains the gap between it and eBay’s valuation except eBay’s
    cleaner commerce model: never takes possession of goods, only facilitate
    the sale.

  • RealNetworks (NASDAQ:RNWK) first landed on the list in December,
    based on what I saw as a growing demand for audio and some video on the Web
    and its leadership status. We believe the recent spate of deals to secure
    distribution through AOL, Netscape and Lotus give it a stronger hand in the
    battle with Microsoft for media streaming software.

  • Sportsline USA (NASDAQ:SPLN) had the Olympics and CBS network reach
    to raise its profile, which was the event we foresaw 11 months ago before
    SPLN zoomed and then softened. We think Sportsline has lately undersold its
    lineup of sports stars whose Web sites are on Sportsline.com. And CBS
    without an Olympics has proven of little value lately in our opinion. On
    the up side, we think CBS Sports and the NFL could boost Sportsline’s
    profile again.

  • USWeb (NASDAQ:USWB), first hit the watchlist 12/31/97, on our view
    that companies would want to outsource much of the Internet process. Now
    with the pending merger with marketing group CKS (NASDAQ:CKSG), we think
    USWeb could come out a stronger firm once the two cultures get to know each

    As 1998 draws to a close, we’ve kept the top 10 watchlist the same.
    It’s been quite a ride so far and we’ll see where the group ends this year
    before posting our top 10 to watch for 1999.

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