|
The Internet Financial Connection, December 18, 1999
-------------------------------------------------------------
Presented by Mark Johnson, Editor of the IFC
siliconinvestor.com
--------------------------------------------------------------
To Subscribe: Send a blank email to
<mailto:ifc-subscribe@topica.com>
Please tell a friend about this newsletter :)
--------------------------------------------------------------
!!! ATTENTION INVESTORS !!!
Try Investor's Business Daily FREE for two weeks.
Investor's Business Daily -- a proven way to get the best
stock, options, and commodities information you need, every
business day.
Click on the link below
ibd.infostreet.com
to begin receiving Investor's
Business Daily. There is no commitment and you will enjoy
two FREE weeks of Investor's Business Daily delivered
to you every business day.
"One of the best sources of financial information
available!" Mark Johnson Editor of the
Internet Financial Connection.
ibd.infostreet.com
--------------------------------------------------------------
This newsletter can be viewed at
siliconinvestor.com
In This Issue:
1. Top fund manager tells why tech stocks have more upside
2. Ibis Technology
3. Dixons Group
4. ICON Technology Fund
5. Book Review: How to Become the "Millionaire Next Door"
6. Interesting Articles on the Internet by Joe Dancy
7. Disclaimer
----------------------------------------------------------
1.
Top fund manager tells why tech stocks have more upside
siliconinvestor.com
Mark Johnson, Editor of the Internet Financial
Connection, provides the following interview
with Amy Selner of Berger Mid-Cap Growth Fund
bergerfunds.com. Below is the write-up.
Amy Selner is the portfolio manager of the Berger
Mid-Cap Growth Fund and manager of the Berger
Small-Cap Growth Fund, up 121 percent and 82
percent respectively. She uses a rigorous
research and analytical investment style, and
likes to invest in companies that have the
leading market share in an emerging industry.
The companies that she invests in usually have
a proprietary technology product or service that
creates high barriers to entry. Amy is an
ex-technology analyst and focuses on the
technology sector because of the high growth
prospects of the industry. About 55 percent of
both of her funds assets are invested in the
technology area. "The weighting in the tech
sector is high because it is the sector with
the best growth characteristics in the market
today."
Selner uses a thorough "due diligence" process
before investing in a company. "Our investment
process includes due diligence with the company,
their customers and their suppliers," she says.
"We're trying to gain an understanding of the
sustainability of growth drivers in a
particular company we would like to know more
about." Other important factors in a company
include: the competitive landscape, experience
level of the management, and sustainability of
the model to continue to fund the company's
growth.
The technology-heavy Nasdaq Composite is up
over 60 percent year to date. Amy believes
the technolgy rally will continue for two
reasons. First, on a short-term basis, money
flowing into money market funds has increased
dramatically over the last few months. In
October, money market funds pulled in $37
billion in cash and added close to $40 billion
in November. "The amount of money going into
equities is half of that. This means that
nearly $2 is going into cash funds for every
one dollar going into equities. Once this
Y2K cloud is gone, I think that money will
be put to work," she explains. Secondly, the
fundamentals for the tech sector are "just
fantastic." She compares tech firms to the
capital goods stocks of 50 years ago that
built the U.S. industrial economy. "The
technology stocks are building out the
infrastructure for the Internet and the
information economy. This is a paradigm
shift and a long-term secular play... Sure,
tech stocks may be volatile in the short
term, but over the long term, have a long
way to climb."
A few tech names Selner favors include: Cree
Research (CREE 68 5/8), Agile Software
(AGIL 176), Commerce One (CMRC 419), Ariba
(ARBA 237 1/2) and PRI Automation (PRIA 48 3/8).
Cree Research makes silicon carbide-based
semiconductor devices for high-speed and
mobile communications. The demand for bandwidth
has accelerated and the need for high speed
communications equipment is growing. Cree's
semiconductors will be used in a variety of
devices in the wireless and handset industry,
where alternative silicon approaches are
needed. Cree produces 90 percent of the
commercially available silicon carbide wafer
supply. Amy is impressed with Cree's
40-percent-plus revenue growth rate and the
company is one of her fund's core holdings.
Selner notes that the Internet is
revolutionizing business transactions and
relationships. "It is important for OEMs
and suppliers to closely coordinate the
production and assembly of thousands of
individual parts that may make up one product."
One company she likes that will bring
businesses closer together is Agile Software.
It is a company that provides one platform
that helps to quickly communicate design
changes, defect information, product
information and customer preferences into
the supply chain. "The end result is a
faster time to market and a more efficient
production process." Agile's customers
include: General Electric, Lucent
Technology and Texas Instruments.
Commerce One and Ariba are in the
business-to-business (B-to-B) ecommerce
software area. She adds that companies in
the B-to-B ecommerce area are trying to
create a Network Effect. "Each new buyer,
suppler or partner delivers more value to
every other person that's within the
ecommerce circle. It's a powerful
equation for leveraging tremendous upside
in a massive market. This Network Effect is
a buzzword that you're going to hear from a
number companies. Commerce One has the
ambition to create a global trading
network powered by its MarketSite
platform." It has secured partners that
include: British Telecom, Nippon
Telegraph and Telephone and General
Motors.
PRI Automation makes factory-automated
systems that automate the semiconductor
manufacturing process. Amy cites that
fundamentals within the semiconductor area
are very good. "Estimates indicate that
next year will be a big year for capacity
expansion. PRI has tremendous upside from
here, along with a rising margin situation."
In the Internet services space, Selner is
high on Diamond Technology (DTPI 84 1/8).
It provides digital strategy consulting for
businesses. "As companies embrace the Intenet,
they need to outsource a lot of this
consulting and strategy work to help them
move quickly. Time to market is of the
essence and people do not want to get left
behind. Digital strategy and consulting has
been a very robust area."
One area Amy is cautious on is the financial
area. She does not view that area as a core
growth area and is hesitant to invest in
that space.
Like 1999, Amy believes that 2000 and 2001
will be a stock-pickers market. She is
confident that during the next few years,
aggressive growth mutual funds will continue
to outperform the market. "If you are in an
aggressive growth fund, you should do quite
well!"
-----------------------------------------------------------------
2.
Ibis Technology
siliconinvestor.com
Jesse Soto, technology analyst for Highmark
Small Cap Mutual Fund highmark-funds.com,
provides the following stock idea on Ibis
Technology (IBIS 51). Below is the write-up.
Ibis Technology is a semiconductor equipment
and wafer manufacturer. They are not what you
would call a traditional silicon wafer
manufacturer. Ibis has pioneered a new
technology known as SIMOX (which stands for
separation by implantation of oxygen).
Essentially this process injects a layer of
oxygen into a silicon wafer, which is then
heated. The result is an insulating layer
buried deep in the wafer. This end product,
known as SOI (Silicon On Insulator), serves
as a conductive layer that lowers power
consumption and increases speed.
Jesse Soto, technology analyst for the
Highmark Small Cap Mutual Fund explains that
Ibis' technology essentially increases the
speed in a typical chip around 30 percent.
"Power consumption can be reduced up to 80
percent, which is enormous!" says Jesse.
SOI technology enables chip manufacturers
to leapfrog a generation, 18 to 24 months
in terms of the semiconductor life cycle...
It is a huge advancement!" He adds that as
semiconductors become smaller there are
physical limitations as to what Moore's
Law will allow. "This is where SOI
technology comes in. This technology allows
for advancements that were previously
unavailable."
Ibis sports an impressive list of clients
that includes: IBM, Mitsubishi, Motorola
and AMD, among others. Most visible is
IBM, which has been a big backer of Ibis'
technology. It is a major customer for
Ibis wafers, and has also purchased
several machines to bring the manufacturing
process inside IBM fabs. In fact, IBM has
been a vocal supporter of SOI for some
time, and may begin shipping products in
volume as early as next year, the first
of which probably will be the Apple PowerPC
notebook processor. It will be followed
shortly by other high-end IBM processors,
including those used in business servers,
routers and mainframes. "In fact, by late
next year, all of IBM's microprocessors
could incorporate SOI technology." Soto
notes that IBM could be the tip of the
iceberg because many other industry
heavyweights are aggressively looking
into Ibis' technology.
Many recent announcements have suggested
a broader acceptance of SOI technology.
Mitsubishi for instance, recently
announced that it has licensed Ibis wafer
manufacturing technology and will ship an
already-owned Ibis machine from Ibis'
headquarters, back to Japan. This is a
clear prelude to Mitsubishi manufacturing
SOI-based wafers in volume. Mitsubishi
will receive the machine, learn how to
manufacture the SOI wafers and then ramp
up production by ordering other Ibis
machines. This is a strong endorsement of
Ibis technology, considering that
Mitsubishi is the fifth-largest wafer
manufacturer in the world.
Additionally, Samsung, which has been
evaluating Ibis' SOI technology, has
announced that it will continue to
manufacture the Alpha chip for Compaq
computers. This business was won with the
caveat that Compaq and Samsung will invest
$500 million in advancing the technology
for the Alpha chip, which will include
SOI.
Other high-profile announcements will
most likely come from Motorola and AMD.
The former has been evaluating Ibis
technology for some time. Motorola is
probably not too far from unveiling
SOI-based products ideally suited for the
mobile handset market, according to Soto.
AMD, which incidentally has an R&D agreement
with Motorola, will probably incorporate SOI
into its next-generation K8 chip. "If they
can't get an advantage over Intel on the
manufacturing side, they'll do it on the
process side." Also on the horizon is a
privately owned company known as Bookham
technology. Already, this company (which
is well known on Wall Street) accounts for
15 percent of the total demand for Ibis
wafers. Bookham is in a hot space since it
addresses the fiber-optic transmission
market, which is an area that is "absolutely
on fire right now."
Jesse mentions that the uses of Ibis'
technology are enormous. "Ibis' technology
is ideally suited for Internet and wireless
products, the technology reduces power
consumption and increases performance, both
incredibly important characteristics for
next-generation technologies. On top of all
this potential in Ibis' end markets, the
company is relatively unknown, it has very
little Wall Street coverage and a small
following of retail investors, even though the
stock is up over 300 percent year-to-date.
That will change once new product introductions
are announced, and the Street starts to believe
that the adoption of SOI as an enabling
technology has arrived." Analysts estimate that
Ibis will earn 24 cents in 2000 and 80 cents
in 2001. Jesse views those estimates as
conservative and thinks the stock has a long
way to go.
There is a thread that discusses IBIS on SI.
Subject 5459
------------------------------------------------------------------
3.
Dixons Group
siliconinvestor.com
Thomas Melly of Simms Capital Management,
simmscapital.com, provided the
following stock idea on Dixons Group
(DXNGY 62 7/8). Below is the write-up.
Over the last year, Tom Melly of Simms
Capital Management has provided a couple
of fantastic stock selections. In December
of 1998, he selected Nokia at $50, it now
trades at well over $150 per share. More
recently, last May he selected WPP Group
at $43 1/2. It now trades at $76. Tom's
investment process entails a portfolio of
stocks from all over the world. His
international stock portfolio is up over 35
percent year-to-date, and he mentions that
there is a growing trend to buy overseas
equities.
Currently, one of Tom's favorite selections
is Dixons Group. It is primarily an
international retailing group based in the
UK. The company mainly sells high-tech
electronics, communications equipment and
computer products and is similar to Tandy
Corp's RadioShack. "Dixon's has solid
fundamentals, including a positive cycle for
consumer electronics, which is very
favorable, "says Melly.
Tom notes that Dixon's has a "great Internet
kicker." It owns 80 percent of Freeserve,
the largest Internet service provider in
the UK and offers free Internet access. The
market capitalization of Freeserve is over
$7 billion. "They have about one third of
the market share for Internet users in the
UK and they did it all in one year...
Freeserve has around 1.5 million users and
was one of the first to offer free Internet
access, and is the dominant player in the
UK... They have a strong business model and
believe it will continue to grow."
Melly figures Dixon's will earn about $2 for
fiscal year ending in April of 2000 and
$2.30 in fiscal 2001. He calculates that
the market capitalization of Freeserve is
about 60 percent of the capitalization of
Dixon's. He believes the shares of Dixon's
will move higher and eventually reflect the
value of Freeserve.
----------------------------------------------------------------
4.
ICON Technology Fund
siliconinvestor.com
Nick Azari of Meridian Investment Management
Corp. is an advisor to the ICON Technology
Fund iconfunds.com. He provides
the following interview with Mark Johnson
of the Internet Financial Connection. Below
is the write-up.
Nick Azari of Meridian Investment Management
Corp. is an advisor to the ICON Technology
Fund. The ICON Fund has produced over an
85-percent gain so far this year and directly
benefited from hot sectors that include:
semiconductors, semiconductor equipment,
computer networking, computer peripherals
and computer hardware. "We have participated
in the technology move quite nicely," says
Nick.
In light of the run in many of the companies
that were in the ICON Technology Fund, the
fund has sold many of the companies that are
in the sectors mentioned above. Such names
include: Intel (INTC 80 1/4), IBM
(IBM 109 1/4), Hewlett-Packard (HWP 106 5/8),
Dell (DELL 45), Compaq (CPQ 25 3/4), 3Com
(COMS 48 1/2) and Cisco (CSCO 97 7/8).
"Currently, we are a strange-looking
technology fund," says Nick. "We sold many
of the well-known technology names because
we view them as overpriced." He notes that
many of the technology-related names,
generally speaking, are overpriced and
their leadership is not sustainable.
He points out that he has been moving into
areas that are not as hot such as electronic
instruments and computer systems. Companies
he favors in that area include: Alpha
Industries (AHAA 55), Coherent (COHR 25 3/8),
Perkinelmer (PKI 42 1/2), Comdisco
(CDO 31 3/4) and Computer Sciences
(CSC 85 1/2).
Even though the fund has liquidated many
technology holdings due to valuation concerns
as noted above, Nick is bullish on the
long-term prospects in the technology
industry. Y2K worries have not altered his
positions and does not view them as a
distraction.
------------------------------------------------------------------
5.
Book Review: How to Become the "Millionaire Next Door"
siliconinvestor.com
Joe Dancy, co-editor of the IFC and editor of The
Lone Star Growth Investor
members.aol.com,
provides the following book review
To conserve bandwidth please use the link
below to view the article.
siliconinvestor.com
------------------------------------------------------------------
6.
Interesting Articles on the Internet
siliconinvestor.com
Joe Dancy, co-editor of the IFC and editor
of The Lone Star Growth Investor
members.aol.com
provides the following links to
Interesting Articles On The Internet. These
articles were from a daily worldwide search
of over 150 newspapers and magazines.
Subscriptions to his newsletter are FREE.
members.aol.com
INTERNET AND ELECTRONIC COMMERCE
Streeter and millions of others are cashing in
on the latest Internet marketing craze: AllAdvantage
and dozens of other companies are rushing to build big
audiences by handing out cash to people willing to let
advertisers track their Web surfing and send them ads
tailored to their habits.
bergen.com
Mr. Klimento drives a truck, but he never makes any
deliveries. Or rather, he is continuously delivering
something - information. The panels of his 28-foot-long
(9-meter-long), 12-foot-high Mitsubishi Fuso are a
mobile billboard for GiftCertificates.com. It is a
virtual truck for a virtual company.
iht.com
It looks like the deal of a millennium. A company
goes public for the first time in what's known as
an initial public offering (IPO). Investors clamor
to own the first shares the company has ever
traded publicly on the stock market.
detnews.com
While the business-to-consumer online marketplace
continues to swell, yet another industry is ready
to try to squeeze revenues out of the profit-stingy
Internet medium. This time it's the hardware and
home-improvement business, as major companies in
the sector make plans for launching and expanding
Web ventures.
mercurycenter.com
Sony Corp., the world's second-largest consumer
electronics company, said Friday it planned to form
an Internet bank in Japan in 2001, its latest move
to attract consumers with a gamut of on-line services.
iht.com
The number of Web surfers visiting electronic
commerce-related Web sites increased 44 per cent
for the week to December 5 compared with the same
week of last year, according to media research
firm Media Metrix.
technologypost.com
AS soon as my jet lag-induced fog lifted after
returning from six months in Australia, I couldn't
help but notice the .com ads, everywhere. The ads
aren't just from e-commerce players trying to get
a piece of the $6 billion in consumer spending over
the holiday season.
nypostonline.com
MARKETS AND INVESTING
It's no secret why companies launch initial public
stock offerings. They need to raise money to expand
their businesses. And, IPOs, as the offerings are
called, provide a way for the private owners to
create a market for their company's stock -- and
find out what investors are willing to pay for it.
The psychology driving hot IPOs of late is not
much a much different the impulse than drives
the prices of collectibles like Beanie Babies.
post-gazette.com
Many high-tech firms such as Amazon.com have yet
to make a buck in profit, but the so-called "New
Economy" they embody may have already outgrown the
"old" -- at least in the minds of many investors.
detnews.com
If you take the stock market news at face value,
you would think that everyone anywhere near the
market is getting rich. After all, the big U.S.
market indicators such as the Dow Jones industrial
average, the Standard & Poor's 500-stock index and
the Nasdaq composite index ended the week at new
highs or within spitting distance of them. Even
though virtually all broad-market indicators are
up this year, most of them substantially, more
U.S. stocks have fallen in price than have risen.
Strange, but true.
washingtonpost.com
The year isn't even officially over yet, but
Amerindo Technology Fund has already been dubbed
the top mutual fund of 1999 by Lipper Analytical
Services Inc.
nypostonline.com
Bargain hunters should consider industry trends
and company performance before buying. If your
most pleasurable shopping pastime is digging
through a store's bargain bin in search of that
overlooked gem, then cheap stocks are probably
your favorite kind of investment.
detnews.com
Given the intermittent problems he has had trading
stocks through his online broker's system, Bob
Schreier does not want to take any chances when
the clock turns to January 1, 2000 -- so he's
selling all his stocks.
techweb.com
When it comes to investing, Eric Efron,
co-manager of the USAA Aggressive Growth
fund, likes to think of himself as a
'futurologist.' 'A futurologist is someone
who identifies and predicts profound trends in
the economy and society, and selects stocks that
will benefit from those changes.'
globe.com
Everybody agrees investing is risky. But what
is risk? That's where people disagree.
Traditionally, experts have gauged risk by looking
at an investment's price gyrations.
denverpost.wsj.com
The year-end picture looks awfully familiar:
The Dow Jones Industrial Average, despite
cooling off a bit last week, is on track to
finish the year with another 20% plus gain,
while the Nasdaq Composite Index, fueled by
technology stocks, hit record highs last week
and has soared more than 60% this year. "There
will be a day of reckoning for these star
stocks one day," says Robert Freedman, chief
investment officer at John Hancock Funds in
Boston. "But who knows when that will happen?"
denverpost.wsj.com
BIOTECH, SEMICONDUCTORS, AND Y2K
About 34 percent of Chicago-area residents say
they plan to stockpile food, and 36 percent will
withdraw extra cash as a precaution against
Y2K problems.
chicagotribune.com
The recovery of the semiconductor industry is
in full swing. The Semiconductor Industry
Association announced Thursday that chip sales
reached record levels in October, and National
Semiconductor Corp. reported second-quarter earnings
that were far stronger than expected.
mercurycenter.com
ECONOMICS
The unemployment rate has fallen as steadily as
a barometer announcing a storm. Employers struggle
to find workers. The Federal Reserve raises
interest rates in anticipation of inflationary
pressures from higher labor costs. But those costs
don't show up in the standard statistics. Yet they
must be out there, so the search is on. The Fed
itself is a prominent sleuth, and its latest lead
is stock options.
mercurycenter.com
January, the United States will break a 30-year-old
record for the longest economic expansion in
history -- almost nine years of prosperity, which
started in March 1991. Not since the 1960s have the
engines of the economy run so smoothly and steadily.
bergen.com
At the Economic Strategy Institute, Managing
Director Lawrence Chimerine worries that, without
some mechanism to open up markets for U.S. products
and services, particularly in Asia, there's no
prospect of controlling a U.S. trade deficit that
is now approaching $300 billion a year. In his view,
that is an economic and political time bomb just
waiting to explode at the first sign of an economic
downturn in the United States.
washingtonpost.com
-----------------------------------------------------------------------
7.
siliconinvestor.com
DISCLAIMER: All information contained on this page are from the
authors cited. The information is believed to be reliable but
there is no guarantee to its accuracy. Stock ideas presented by
mutual fund managers, money managers, newsletter writers and SI
participants may be bought or sold by them or the company they
represent anytime before or after being presented in this
newsletter. Anyone purchasing the stock ideas above should
consult a financial advisor before doing so. The stock ideas
mentioned above are not solicitations to buy or sell but to
provide people with information from many sources. I
(Mark Johnson editor of the IFC) am not paid any fees by the
above writers nor by the companies represented. The stock ideas
may represent a starting point for investors. People are
encouraged to do their own homework before buying any stock.
Neither Silicon Investor or the Internet Financial Connection
will be responsible for any loss occurring from
the purchase or sale of the above securities or any securities.
=========================================================================
To Subscribe: Send a blank email to
<mailto:ifc-subscribe@topica.com>
Please tell a friend about this newsletter :) |
|
