The broad market sneezed in August and Internet stocks caught a cold.
But our top 10 Internet stocks to watch in 1998 are still up 127% since the
ISP and AOL heckler Earthlink (NASDAQ:ELNK) topped the list
this time around, up a phenomenal 234% since December 31.
Our latest thoughts:
Of the 10, the only downer was Onsale (NASDAQ:ONSL), which pioneered
auctioning of surplus goods on the Internet. The problem with Onsale was
that bidding over and over to keep your bid active, trying to beat rivals,
gets to be tiresome fairly quickly for busy people. It’s entertaining the
first time but sometimes you just want to buy something now and not have to
keep upping the ante to stay in the bid.
Hot new IPO ebay’s (NASDAQ:EBAY) model is a little more efficient, but we
wonder how long people will enjoy bidding on new and used goods in a
glorified garage sale. And Yahoo-Onsale’s personal auction area, which just
launched a few weeks ago, already shows signs of large numbers of users.
It’s free while ebay’s model relies on percentage of sales and a small
fee to post the ad.
We all know what wins on the Web–free. In our view
ebay’s model appears out of synch and non-protectable as time draws on. To
win it must make the service and process superior to rival efforts, worth
the percentage hit on sales and fee.
Infoseek’s (NASDAQ:SEEK) pending
deal to sell 43% of itself to Disney (NYSE:DIS) only now bears some fruit.
Wall Street’s waiting for Godot, rather Go.com, the soon-to-debut joint
effort from the tech-heavy Seek crew and the marketing magicians at Disney.
SEEK posted 140% run since we selected it for the hot list, a great
But we would expect more bang for the buck after Disney stepped in.
ESPNSportszone.com and Starwave will be under the SEEK umbrella as part of
the agreement. Marketing has never been its strong point and it was the
last search engine to go public, never getting the valuation of its peers.
With Go.com and some aggressive TV-Web tie-ins perhaps it may yet become
the Lion King in this space.
AOL (NYSE:AOL) was one of the few stocks to gain more ground since last
time we checked in on the top 10 July 6. AOL shares have soared 159% year
to date and plodded a small but steady 4% rise since July 6.
Against all odds, AOL now blends its own online service and the Internet
into an almost
seamless experience–almost. The ICQ buy adds eyeballs (more than 10
million users in its reach). And AOL finally reported its fiscal fourth
quarter results which sqeaked out a $7.1 million net income despite
Relatedly, RealNetworks (NASDAQ:RNWL) shares fell
dramatically when its CEO blasted Microsoft before the Senate. Intel
stepped in as a partner of sorts when Real licensed its media streaming
A bundling deal with AOL for its 4.0 software just days ago
could put Real’s players in the PCs of some 13 million AOLers eventually
and make it a key part of AOL’s multimedia solution. Said another way,
RealNetworks signed two gorillas in the gorilla war it fights with
Microsoft over the future of Internet video-audio software.