Topic 317 [investment]: Hot & Not, Internet Stocks & Investments #190 of 190: nucking futz (mtrbike) Fri Feb 5 '99 (10:04) 93 lines alexsf wrote: > my ebay! sos! Oh Ebay! My Ebay! The NASDAQ day is done, The Internet has held its course, the prize we sought is won, The highs are near, the bell I hear, the analysts exulting, While follow charts the steady gain, the bubble firm and daring; But O stop! loss! limit! Oh the bleeding ticker red; where on the board my Ebay lies, Fallen cold and dead. Oh, I am so very sorry. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Carnage yesterday and today in the NASDAQ. Yesterday's 83 point losss was the 3rd biggest point loss in history, and today's 50ish points loss so far isn't looking too healthy either. Although given that the NASDAQ had been climbing really quickly in January (up almost 15% for the month), a corective loss of a couple percentage points can be viewed as a good thing. (this is your opportunity to get in on some of those big tech names you've been meaning to buy). Speaking of big names, the big news in the tech sector is the scary news from AMD yesterday that Intel is eating its lunch (of course, AMD seems to announce this same news every few years and really, the whole POINT of AMD is to run catch-up behind Intel, so one wonders why this is a surprise, but anyhow). The news of price wars in the chip indsutry has put the serious fear into the big tech names, and where the big tech names go, so goes the NASDAQ. Red, red, red. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Last time I talked about all the excitement in online brokerage stocks. To follow up on that report -- the excitement continued yesterday, with those same stocks continuing upward to record levels (they, like most of the techs and internets, are down again today). Except for one. Etrade (EGRP) picked the worst possible time to have technical problems. The glitch they had on wednesday continued into thursday, with the howls of many furious traders resounding across the country. The New York attorney general got into the act, announcing it would launch an "inquiry" in the practices on the online brokerages based on the hundreds of complaints he had receieved about etrade. Etrade is down 15% today (more than the market). $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$__$ Egghead is rumored to be a takeover target by Amazon, so that Amazon could get into the software market. Bunch of analysts are sniffing at that rumor, pointing out that Amazon gets books from Ingram, and surely they could get software from Ingram Micro. Egghead is up slightly in a down market. Lycos is rumored to be in a possible deal with NBC/GE. This goes back to the old takeover/media deal rumors that have been floating around for a while now. Lycos is also up. Yahoo splits today after the closing bell. $_$_$_$_$_$_$_$_$$_$_$_$_$_$_ Bunch of IPOs today. Pacific Internet (PCNTF), singapore's biggest ISP, priced at $17, opened at $88, and is trading at $55 or so. Today's other biggie is Modem Media Poppe Typson (MMPT), which priced at $16, and just opened right this moment at $62. Also today are an enormous GM spinoff, Delphi Automotive (DPH), priced at $16 and trading at $18, and Del Monte Foods (DLM), yes, the del monte fruit packing company, priced at $15 and trading at $15 3/8. I include these last two to note that these are how IPOs *usually* work -- the enormous leaps on day one are an internet phenomenon, not an IPO one. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$ The Victoria's Secret fashion show on wednesday was watched by over 1.5 million people, most of whom were journalists. However, given that they had only expected 500K, most of those people didn't manage to get in, or got in and couldn't see things very clearly. The horror! Many of said journalists weighed in on this tragedy, explaining that the Internet is still a new medium, and that we still have a long way to go before the technology matures. So now we know the goal: the internet will be mature medium when as many people who want to watch live underwear models can do so. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Laura's Internet Stock Report is copyright 1999 (c) Laura Lemay lemay@lne.com Permission is Granted to forward as long as this copyright remains intact.

even more stuff to think about...

it's L O N G today! Lotsa news after a spectacular NASDAQ day. Another one of those bizarre techs-rule-the-world days. DJIA down, NASDAQ and S&P up. But there are many worried noises coming from analysts about the NASDAQ, mostly because there are fewer and fewer stocks drving it up. The so called advance-decline line -- the proportion of stocks in the NASDAQ that go up versus those that do down -- has been turning negative, and that's not a good sign. But the nasdaq is a weighted index, with only four stocks accounting for 40% of the index (the four horsemen: Microsoft, Intel, Dell and Cisco), so if those four stocks do well, the NASDAQ will still *appear* to do well, even if the rank-and-file are falling over. If the four horsemen fall, though...ouch. Watch out. Ralph Acampora, a Wall St talking-head from Prudential Securities, said that there's a potential of a 5-10% correction in the markets, tech stocks in particular. Given that Mr Acampora has been right in the past (particularly in last october's itty bitty bear), his comments are being credited with spooking the broader market today. Speaking of lack breadth in the nasdaq, internet stocks are not amongst those on the upside. The IIX index was down only 1.31%, but the internet blue chips were down much wider than that. Amazon down 7.5%, AOL down 4%, Etrade down 7%, Lycos and Yahoo down 10% apiece. All except Ebay, which is up on no apparent news -- guess they sold off a bit too much last week and people thought there was value there. $_$_$_$_$_$_$_$_$_$_$_$_$_$ Keyword today: wireless! There's a cellular/wireless conference going on this week (Wireless '99, there's a clever name), so lots of big tech companies are trotting out thier wireless announcements, stuffed full of acronyms only wireless geeks understand, including: + Cisco and Motorola announced a joint wireless IP project, to offer wireless internet access as soon as august (Lucent had already bought a wireless internet access provider earlier). + Motorola on its own joined with Nextel and Netsape to offer a wireless telephone package to offer voice, data and internet access through a cell phone. + Schlumberger announced that they've done a survey that said that people want cell phones with smart cards in them (for things like prepaid cellular). Given that no one else seems to want smart cards for anything, its worth a try. + Tomorrow Nortel will announce something called "Mobile Webtone," which is apparently not a swing band. It sounds suspicously like the same thing Cisco and Nextel are both doing with wireless internet access. + Spyglass, the company that used to do browsers and which has been casting frantically about for a business model ever since, announced a "content delivery platform" that will convert internet content into differnt formats that can be read by devices such as PDAs, TVs, and cell phones. Gee. and here I thought HTML WAS SUPPOSED TO BE DEVICE-INDEPENDENT IN THE FIRST PLACE (sound of teeth-grinding). + Not to be outdone, the only two tech and telecom companies left, Microsoft and British Telecom also just announced an internet-over-cellphone project as well. So there you go, everyone throw out your computers, we'll all be using cell phones to read our email in the next year. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Microsoft is supposedly reorganizing to better focus on consumers and the internet. When I was still working for big companies, a reorganization was a sign of weakness, something to be gotten over with and hushed up and accomplished as fast as possible. It was expensive and painful and ugly. Microsoft's reorganization is being hailed in the press as a fabulous move, a terrfic idea, and the best way to position Microsoft for the new millenium. The stock was up 5 to 165 (3%). $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Intel is expected to cut prices on its Celeron chips this week, bringing the price of an entry level PC to somewhere around $1.35. Intel was up 5 1/8 to 132 11/16 (4%). AMD, which makes most of its income from low-end chips, and announced last week it will lose a whole lot of money to Intel this quarter, is expected to repond to the news by bursting into tears. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Computer Literacy bookstores, which keeps insisting that it is an internet stock, is changing its name. But it won't say what its changing it to. Why? Domain name squatters, those carpet-baggers of the new media who register bunches of domain names with names close to a corporate name in hopes of being able to sell them for big bucks to the company that needs them (or to another company that hopes to take advantage of misdirected potential customers who cannot type). If Computer literacy announced, for example, that it was changing its name to, oh, caterwaul.com, then immediately the squatters would register caterwaul.net, caterwaul.org, catterwaul.com, caterwall.com, the-catercaul.com, catarwaul.com, and so on, and computer literacy would have to either pay up for all these other domain names, or pretend they don't exist. By keeping the new name secret, they can come up with a list of every conceivable different variation of domain names, and then register them all themselves at the "wholesale" internic price. Good deal for them. The new name, supposedly, has eight letters and invokes "an image of vastness and knowledge." Crossword puzzle fans, start your engines. Computer Literacy (CMPL) was up an eighth to 15 3/8 (.82%). $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Thought-I'd-Heard-Everything-Award: Today at the conference for the National Automobile Dealer's Association, a group of automotive suppliers announced that they will collaborate on a new internet standard, based on XML to help dealers sell cars over the internet. As a wise man once said, I am NOT making this up. Auto Site, Auto Trader Online, AutoVantage.com, Cars.com, The Cobalt Group, Kelley Blue Book, MSN CarPoint, Reynolds and Reynolds, and Stoneage.com will work together to provide a common way to convey customer email and purchase requests to dealers, to make online car buying easier and faster for customers. More than 25% of all auto purchases now include the internet in some aspect of the process. Microsoft, surprise, surprise, is driving the standard. See the draft standard at http://carpoint.msn.com/xml/ $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Big Cojones Award of the Day: Micros-to-Mainframes (MTMC), which is a computer reseller and itegrator (no surprise there), and who have announced a web site (also no surprise there). The stock, which closed friday at 6.375, opened today at 9 1/8, went as high as 12 1/8, and has settled around 9ish, for a gain of 45%. Just 45%? No 328% like other e-tail plays of the past? Well, there's a difference: Micros-to-mainframes is profitable and has no debt. In fact, they were just recommended by Smart Money as good investment. An *investment.* Not a trade. Yuck! No wonder they can't even double on the news. (<--sarcasm) $_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Laura's Internet Stock Report is copyright 1999 (c) Laura Lemay lemay@lne.com Permission is Granted to forward as long as this copyright remains intact.

Yuck! Blargh! Ick! Gross! Bad market day! Ugly market day! Few bright marks in the markets today, not even in the tech stocks: The DJIA was down 158 points (1.78%), the S&P was down 27 points (2.22%), and the NASDAQ was down its third-worst 94 points, almost 4%. The Internet stock index? Brace yourselves. Down 6.71%. Its bad market days like this where its hard not to get obsessed with the short term, particularly since I'm here almost every day reminding you about it. And with internet stocks, every time there's a dip everyone always wonders -- is this the end of the bubble? Is this the crash? is this when it all ends? The answer? Well, yes. Could be. Hard to tell. Could be just a short-term correction. Part of the reason I write the internet stock report is to point out how ridiculous it all is. Stocks that go up 300% on no news. Stocks that go up 300% on stupid news. Stocks that drop by half on rumors being spread around on internet message boards. Day traders who quit thier stable day jobs because they think they can make far more money trading internet stocks on E-trade for four hours a day. The internet sector is effectively investment as extreme sport. But you know, motocross is an extreme sport. Motocross gets your heartrate up, you get in great shape, its a lot of fun....but it also has a tendency to give you really ugly bruises and scrapes and you occasionally break things like legs and collarbones. And spines. Which is why quite a lot of people think that motorcross is just too dangerous, and if you're going to do a sport, maybe something like golf is a MUCH better idea. And there's nothing wrong with that. What you have to figure out, as an investor, is if you're a motocross kind of person or a golf kind of person. Or somewhere in the middle. If you own an internet stock, and it drops 30%, 40%, or more, are you going to freak out and set yourself on fire? Even if you were up 40%, 50% the month before? Then maybe you should be buying something else. Or maybe you should be selling some of those stocks when they run up, lock in some of those profits. Or play in the internet with some amount of money that you won't mind losing (keeping below your setting-yourself-on-fire threshold). Sports analogies! I've really sunk low. Moving on. $_$_$_$_$_$_$_$_$_$_$_$_$ As I posted earlier in a news alert, the big internet news today is USA Networks purchase of Lycos. It was a really complex purchase, difficult to figure out. But from the moment it was announced, investors didn't like it much, and as the day went on, they decided they liked it even less. Lycos closed down 33 (26%) at 94 1/4. Ouch! The fact that USA Networks did NOT pay a premium over Lycos' existing market cap weighed heavily on the sector as a whole, and cast a pall over future mergers. The top ten point losers today were all internet stocks: Cnet, down 25 3/4 points (20%), Ebay down 18 1/8 points (7%), Yahoo down 17 7/8 points (11.26%), Ameritrade down 15 15/16 (18.57%), CMG down 14 3/4 (13.53%), Go2net down 13 1/2 (12%). $_$_$_$_$_$_$_$_$_$_$_$ Network Solutions (NSOL), aka the internic, is having its own problems, badly timed with the internet sector problems. Its first problem is that Our Government is supposedly examining NSOL's monopoly on internet domain name reigstration, with an eye for breaking that monopoly. The other problem is that NSOL is about to issue a secondary stock offering of 4.58 million shares. A secondary stock offering is somewhat like an IPO, in that its a way for a company to sell stock to the public -- except that secondaries get much less brouhaha, and, in fact, are often considered kind of a bad thing, because it means the market will end up with a whole lot more shares on the market. More supply, less demand, lower prices. Particularly bad for NSOL's shareholders who held the secondary stock -- the offer priced at $170 last night, but NSOL closed at $148 today. $_$_$_$_$_$_$_$_$_$_$_$ Ross Perot supposedly made some comments today about how the internet sector is dangerous and speculative, and warned investors not to get involved in those stocks. Given that Mr Perot's company, Perot systems, came public last monday at 18, rose as high as 85 and 3/4 and as been sinking ever since, including losing 12 points (20.73%) today to settle at 46 1/8, well, I propose to take up a collection to go whack Ross Perot repeatedly with a rolled up newspaper. $_$_$_$_$_$_$_$_$_$_$_$_$ 3Com Park. Network Associates Coliseum. Staples Arena. Arco Arena. And now, perhaps, the Yahoo! Pavillion. The San Jose Mercury News rumors that Yahoo! is talking to Bill Graham persents about putting its corporate stamp on Shoreline Ampitheatre in Mountain View. Both Yahoo and Bill graham deny the rumors, but the Merc claims to have a memo. If the rumors are true, Yahoo would be expected to pay many tens of millions of bucks to put its stamp on the ampitheatre. The cost of attaching a cporporate name to arenas has gone up quite a lot in recent years (PSINet paid $105 million for the Baltimore Ravens stadium name), making 3Com's $4 million payment to San Francisco for Candlestick in 1995 seem like a real bargain. $_$_$_$_$_$_$_$_$_$_$_$_$_$ Even in a bad NASDAQ day, we do have a few Big Cojones moments: Innovo (INNO), a maker of sportswear branded from the NBA, NFL, MLB and NHL names, will open an online store. The company is unprofitable enough, and the press release vague enough, that the announcement was good for a 107% gain in the stock for the day. The top percent gainer stock in the day was a company called Mer Telemanagement Solutions, Ltd (MTSLF), which makes a line of "telecommunications management solutions." Formerly a penny stock trading between 1 and 2, They signed a deal with Lucent, and the stock is up 119% for the day. This is the fourth penny stock that has signed a deal with Lucent in the last week and has popped up on the news (I talked about one other one in the previous internet stock report). I'm thinking you could do well in this market by following Lucent's people around to small companies. But the wierdest story of the day is that of Big City Bagels (BIG), which announced today it would merge with VillageNet, inc, an internet service provider. Big City Bagels had expressed expanding outside the food business, but I'm not sure that's quite what its shareholders had in mind. Or perhaps thats JUST what its shareholders wanted to hear -- the stock was up 88% for the day. $_$_$_$_$_$_$_$_$_$_$_$_$_$ Laura's Internet Stock Report is copyright 1999 (c) Laura Lemay lemay@lne.com Permission is Granted to forward as long as this copyright remains intact.

Abbreviated LISR today, as I have to run to catch a plane. My real job is intruding on my fun for the rest of this week, so I'm afraid you'll have to live without LISR until next Monday, unless I can squeeze out a few update in between conference sessions (yuck). Market did absolutely nothing today, for once. Less than a percentage point moves in all the major indexes, with the techs slightly down and the industrials and S&P slightly up (although, its funny, when I wrote an earlier draft of this report, I had "up" and "down" in the reverse places!) We're basically treading water here. No news is good news, I guess. $_$_$_$_$_$_$_$_$_$_$ Lycos continues to bleed, losing another 7%. Today, however, only took the independent portals with it: CNet, Go2Net, Infoseek are also down, but many other internet stocks are up, some of them quite well: Ameritrade was up 28% (!), DoubleClick was up 7%, Broadcat.com up 8% and Excite up 4% and Yahoo up 1%. DoubleClick can thank the Goldman Sachs technology conference for its jump today; in its appearance at that conference it announced it would break even in the year 2000. DoubleClick is also linked to this new Free PC venture, where you can get a Compaq PC for free in return for having ads on your desktop and having your movements tracked and sold to advertisers. What was up with Ameritrade? Probably a combination of two things. One could be called the Big Cojones Effect, if I may be so bold. Ameritrade was up in sympathy with another stock, which you'll learn about at the end of this report. The other reason could have been that E-trade, its main online competitor, has been socked with a class action lawsuit thanks to the outages it had last week. But there was no real news that I could find to cause Ameritrade to soar quite so much today. $_$_$_$_$_$_$_$_$_$_$_$ Ford is rumored to be in talks to merge with BMW. This has absolutely nothing to do with the Internet, its just a juicy rumor I had to pass on. $_$_$_$_$_$_$_$_$_$_$_$ Vertica Software, a tiny penny stock trading over the counter, has been getting a HUGE boost over the last few days. Did it account a web play? Did it make deal with Lucent? Did the day traders get ahold of it? None of these things. It just happened to have a pretty darn good stock symbol: VERT. There's an IPO coming up this week, a company called VerticalNet. VerticalNet is a Web IPO, specializing in "business-to-business communities." Investors, assuming VerticalNet's stock symbol would be VERT (and perhaps there were reports to that effect, its not clear), have been placing orders in anticipation of the actual IPO, and surprise! buying shares in Vertica instead. And so Vertica's stock has gone WAY up in the last couple of days. The NASDAQ rules go that if an OTC stock has a symbol that a larger, listed company wants, the larger company gets it. This happened with Amazon as well -- Amazon the book company took over the AMZN stock symbol from Amazon Natural Treasures. So today, VerticalNet is indeed VERT (and is expected to open for real any day now after pricing last night at $12), and poor Vertica Software is now VERI, and is left to languish on the OTC boards. The moral of this story: If you must place market orders on stocks about to go IPO -- generally a bad idea in the first place -- at least know what the stock symbol is. $_$_$_$_$_$_$_$_$_$_$_$ Big Cojones Award of the Day: Rushmore Financial (RFGI), a financial services company, announced a web site. Oh, but not just any web site. They picked a good one. RushTrade.com is designed specifically for day traders, and will provide online trading and level II market data (real-time quotes, effectively). Rushmore went public last may at 6, and has been trading around 2 since September. They are incredibly unprofitable. Yesterday they closed at 2 1/2ish. This morning, on the news, they opened at 5. The close? 11 3/4. One day gain of 422%. Rushmore financial. Rush More! AHAHAH! $_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Laura's Internet Stock Report is copyright 1999 (c) Laura Lemay lemay@lne.com Permission is Granted to forward the LISR in its entirety with this copyright intact.

From today's LISR: $_$_$_$_$_$_$_$_$_$_$_$_$_$ Go! Go! Go! Go! Go! Stop! Please! First there was Go2Net. Then there was Go.com. Now there's Go Call Inc (GOCA), a penny stock that does offshore casino gambling under the moniker gocasino.com. They've been doing quite well at that business, making actual money at it, so they decided to go into e-commerce and lose some of it instead (which will theoretically make them more of an internet stock play and pump up their stock price). Actually, they already are in e-commerce, sort of. They also run a banner ad clearinghouse (gobannerad.com), where you can sign up to have banner ads put on your pages and you get some cut of the profits. But what they're all excited about is a new site called Indexus.com, a shopper's search engine that will compare prices across different e-commerce sites (so you know you're getting the best price when you go shopping for books or CDs or whatever). Will that make money? Who knows. The announcement of it, however, pumped up the stock from below 1 to 6ish before it settled to the 2 1/2 its been trading at ever since. But 1 to 2 1/2 isn't that bad a gain, overall. $_$_$_$_$_$_$_$_$_$_$_$_$_$_$_$ Laura's Internet Stock Report Daily (LISRD) is copyright (c) 1999 Laura Lemay lemay@lne.com all rights reserved. For more information, send mail to majordomo@lne.com with "info" in the body of the message or "subscribe lisrd your-email" to subscribe.

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