The Coming Year: A Slew of Events That Will Rock Net Stocks
By Suzanne Galante
Staff Reporter
SAN FRANCISCO -- All the presents have been opened, the fruitcake has been
tossed and the Internet mania about e-holiday has yet to subside. But as
Internet companies forge ahead into 1999, they're going to have to start
living up to their hype. Over the next few months, there are a couple of
important dates that analysts and fund managers are watching to see just how
much the Net will net.
Morgan Stanley Conference, Jan. 5-7
The Morgan Stanley Dean Witter Internet, Networking and Software Conference is
the first tech conference of the year. The press is kept out of this one (and
it's a damn shame, as it's at the sumptuous Phoenician resort in Scottsdale,
Ariz.), but fund managers will be watching it closely. Ned Brines, co-manager
of the Phoenix Aggressive Growth fund, says the conference will be a chance
for institutional investors to get a good look at some of the
Internet companies they recently bought into. Brines holds positions in
America Online ( (NYSE:AOL - news) ), Amazon.com ( (Nasdaq:AMZN - news) ) and
Inktomi ( (Nasdaq:INKT - news) ). "Some institutional investors chased some of
these stocks because they had to own them," says Brines. "This will be the
first chance to take a look since the big run-up." With all this money hanging
on every word, the conference, he predicts, could create some big stock
moves. "If anyone sneezes in the wrong direction," says Brines, "the stock
will fall 10 or 15 points."
Yahoo! Earnings, Jan. 12
The biggest search-and-navigation site on the Internet is always the first to
report its quarterly results, giving an indication of what is to come from its
peers. Yahoo! ( (Nasdaq:YHOO - news) ) plans to release its numbers Jan. 12.
Analysts are expecting profits of 16 cents a share for the fourth quarter and
43 cents a share for 1998, according to First Call. That compares with profits
of 3 cents and 2 cents for fourth-quarter and full-year 1997
results, respectively. "Yahoo! is the first to report and already trading up,
like it always does," says Virginia Stuart, an analyst for Scudder Kemper
Investments. "If they have a blowout quarter on the top line, that will get
others that are cheap on a relative basis moving up again."
DLJ's Internet Conference, Jan. 13-15
Another opportunity for Internet executives to gloat over their fourth-quarter
successes will be at the Donaldson, Lufkin & Jenrette Internet Conference Jan.
13-15 in San Francisco. Keynote speakers include AOL CEO Steve Case,
Amazon.com CEO Jeff Bezos and Yahoo! CEO Tim Koogle. The three-day conference
will host several other Net hotshots such as Inktomi, Broadcast.com, eBay (
(Nasdaq:EBAY - news) ) and @Home ( (Nasdaq:ATHM - news) ). "This is a
chance for institutional investors to get more exposure to the models and the
growth rates," says Emmy Sobiesky, a portfolio manager and tech specialist at
Nicholas Applegate. "It gives these Internet companies broader exposure and
broader ownership."
eBay's First Time, Jan. 26
Wall Street darling eBay will fess up to its first quarter as a public
company. Analysts are expecting the company to report quarterly earnings of 4
cents a share, according to First Call. That's one penny less than the company
reported for its September quarter. Full-year earnings are expected to be 16
cents a share. Investors have pushed the Internet auctioneer's stock up nearly
600% since its debut in late September. eBay is expected to report its
results Jan. 26 after the markets close.
Fourth-Quarter PC Sales Figures, Jan. 25
New personal computers translate into more Internet users. Those numbers are
being released to the public Jan. 25; beating or missing the numbers could
move those stocks. International Data estimates that 10.5 million units were
shipped in the fourth quarter, up 18.2% over the fourth quarter of 1997. "The
Internet is a very big driver for getting people to buy PCs," says Schelley
Olhava, associate PC desktop analyst for IDC. "Another big driver is
that prices are so good," she says, citing a $399 emachines system and IBM's (
(NYSE:IBM - news) ) $599 Aptiva.
Amazon.com Earnings
All eyes will be focused on the mother of all Internet retailers when
Amazon.com reports its results. An Amazon spokeswoman says that the company
doesn't know when it will report, but last year, the fourth-quarter earnings
came on Jan. 22. Details on e-commerce will be closely scrutinized. "Total
advertising is less than 3% on the Web and even smaller for total commerce,"
says Sobiesky. "It's growing from such a small base that the high growth rates
are sustainable growth rates. This was the first real Christmas where a lot of
people were shopping on the Internet." She says that there were more than 6
million Internet buyers this holiday.
The Gloves Are Off
After the throng of recent Internet IPOs comes the period when insiders are
able to sell some of their shares on the open market. Because these companies
have such small floats, any sizable chunk of new stock may dilute the shares
and submerge share prices. For example, eBay said in a filing with the
Securities and Exchange Commission that 24.55 million restricted shares will
be available for sale in the public market 120 days after its Sept. 24
offering. That means the shares could come into the market in late January.
eBay's stock is up 409% since the IPO, and this will be the first chance for
most insiders to cash in on all their hard work. "Insiders are going to book
something," says Suzanne Zak, CEO of Zak Capital. "They'd be crazy not to."
More Dog-and-Pony Shows
Just when you thought investors and fund managers attended enough Internet
conferences in January, more are on the way. The good news is that they are
broader conferences that encompass all technology sectors. Dain Rauscher
Wessels is holding its tech conference Feb. 15-18, and Goldman Sachs is
hosting its Technology Symposium Feb. 8-12 in New York City. In addition,
Internet companies that didn't attend the earlier conferences, like Lycos (
(Nasdaq:LCOS - news) ), will be presenting. Raymond James is holding its
Institutional Investor Conference Feb. 28-March 3. Meanwhile, attendees of the
Hambrecht & Quist Internet conference March 1-3 in Utah will be able to end
their days on the slopes or in the warming huts.
Heaping Helping of IPOs
The recent run in Internet stock prices sent a flood of companies back to the
markets, including Ticketmaster ( (Nasdaq:TMCS - news) ) , Xoom.com, AboveNet
Communications, audiohighway.com and uBid ( (Nasdaq:UBID - news) ). Those that
didn't already have initial filings with the SEC decided it was as good a time
as any to start the IPO process. And the floodgates will likely open wide with
the start of the new year. Scudder Kemper's Stuart says one
of the hot IPOs coming up in the new year is PC Order. Another IPO on the way
is the joint venture of CBS ( (NYSE:CBS - news) ) and Data Broadcasting (
(Nasdaq:DBCC - news) ), Marketwatch.com, expected in late January. Shares of
DBCC, in anticipation of the IPO, have more than doubled in the past two
weeks.
Brines, the Phoenix fund manager, says that "1999 is going to be an exciting
year." He adds that "1998 saw the stock prices rise in anticipation, as '99
will be a year of proving business models. If they prove that they can deliver
revenues and eventually earnings, those stocks will continue to run." |
