Steve, I am short Netscape because Microsoft feels threatened by them and is out to destroy them. Windows 98 will come with the browser (see the latest Business Week) and, since Netscape is giving away Communicator, their browser revenues will go to zero. Moreover, their browser market share is going to continue declining. Netscape has other products, but they face stiff competition from IBM/Lotus, Microsoft, and others. I think Netscape is in trouble.
Of course, it can always rebound or some other company can buy them for a price higher than the current stock price. But I trade with the odds (what I think are the odds, of course), and in my view it is more likely that the stock price will go further down.
I see many people who buy a stock because they like the product or because they hate a competitor, even though the fundamentals are negative, mostly due to the Wintel competition. Apple, Novell, Netscape, DEC, Informix, Corel, Sybase, and SGI are examples. After years of suffering the DEC longs found a bit of happiness. But if you had created a portfolio of shorts in these companies (plus Oracle and Sun, which I view as having good fundamentals) you would be doing quite well. One thing I always ask myself is: with so many stocks in the NYSE, NASDAQ, and AMEX, why do some people get so fixated in a few losers?
Another company that I think will eventually be a target of Microsoft is AOL. Once Netscape becomes irrelevant (like Apple, Novell, etc.) Bill Gates will focus on AOL, which is becoming too big for comfort.
Best regards. |
