Subject:
Hi, FYI
Date:
Wed, 04 Aug 1999 20:58:58 -0400
From:
Ogren (address deleted)
To:
Scott McCormick <lastshadow@earthlink.net>
Hi Scott,
Periodically lurk on your SI thread. Busy building a house. Not much
time for online trading with work and all. Hope all is well. I do not
know if you follow Internet newsletters such as the one Steve Harmon (of
ISDEX fame) used to author. Guess he has left the firm and has broken
out on his own. Has been leading analyst in this arena. Thought you
might like to read this message I got this week if you care to follow
his new site (newsletter to follow from him in the future I imagine). Do
not know if this would be of any value to readers of your thread but
according to message, you are free to post it if you like.
Regards,
Peter
=====================
Subject:
NetStock! by Steve Harmon 1999.08.02
Date:
Mon, 2 Aug 1999 09:56:23 -0700
From:
netstock-list@e-harmon.com
To:
e-harmon_newsletter@lists.tdl.com
NetStock! by Steve Harmon
To change your email address or unsubscribe, go to:
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************************************************************************************
e-harmon.com's
NetStock! by Steve Harmon
ceo of e-harmon.com
"for the internet investor"
_________________________
Dear colleague,
I wanted to share the great news with you first of the new e-harmon.com, a
firm formed by several key Internet and Wall Street veterans to focus
110% on
Internet investing
Many of you over the years have come to appreciate the quality Internet stock
analysis that I have pioneered -- analysis that led CBS MarketWatch to name
me one of the "Best of Wall Street" and that has earned the readership of
Bill Gates, Jerry Yang, Marc Andreessen, John Doerr, Ann Winblad, Dave
Wetherell, and thousands more globally.
I resigned my position as senior investment analyst and vice president of
Internet.com ( a Web developer-focused firm) to allow me and the great
team I
have assembled to move at maximum bandwidth in the Internet investing
space...I no longer support any products they produce or ones which I started
there that they own the name on, including the Internet Stock Report, ISDEX
and HotWatch (a paid service)
Our commitment at e-harmon.com (as always) is to bring you the best quality
analysis about Internet stocks and investing as I have these past 5 years,
and to bring more than that (details to follow soon!)
We are truly excited about the future of the Internet and investing, now on
with the show!
____________
Crack That Whip!
DEVO & The Net's New Broadband Wave
In the 1980s the new wave band "DEVO" popularized the notion of
"de-evolution," a retracing of prior steps in order to go forward.
Welcome to
the late 1990's reprise: broadband infrastructure stocks.
Said another way, just as Rome, Athens, and several other cities have built
layer upon layer on top of each other over the centuries, I think a similar
phenomenon may be occurring now with the Internet.
While the Internet is a perpetual "work in progress" this new wave of
construction is significant enough in its advance to give investors a chance
to ride the incoming wave. What is this latest leap across the transom?
speed. Effective speed.
Having seen the first real commercial phase built (I've been a stock analyst
in this space since 1994 when Netscape, Yahoo, Amazon, eBay and more
were all
privately held) I've been inside the machine on the first wave of
infrastructure tools.
The checklist then included browser makers such as Netscape, Mosaic (from
Quarterdeck, Spyglass), NetChameleon (from NetManage), and several others
that have faded. The browser was the "foundation" of the first Web. From an
investment perspective it was the first opportunity to buy into the Internet
as a consumer/commercial revolution.
Web page builders including from Netscape, Frontpage (Vermeer in those days),
freebie Mosaic, CGI, PERL, Java (from Sun), security, encryption, commerce
security, and several other key technologies all built out the dial-up Web.
The evolution of innovation has brought us to a leaping ahead point into
broadband now and ongoing into 2000, 2001, 2002. Think of this broadband
infrastructure as a new layer being laid over the existing dial-up modem
crawl.
First, broadband in this definition means anything above ISDN, or anything
above 128 KBPS. For the investor there are a number of ways to play this
wave: hardware, software, services.
1) Hardware. Obviously there's Cisco (NASDAQ:CSCO), the monster that ate the
Web, the router leader bar none. Lower risk (but lower reward). A more
adventuous position may be Juniper Networks (NASDAQ:JNPR), a recent IPO
highflyer. I don't think Juniper will get to Cisco's gorilla status but
I can
envision JNPR being taken out by a Cisco or other large network player. Every
ape needs its banana. Another angle on hardware is networks. Companies like
PSINet (NASDAQ:PSIX) which has survived the early ISP wars and landed a
considerable amount of fiber optic lines to make it a believable
presence in
the lightspeed data of the future.
2) Software. The more well-known stock in this space is Inktomi
(NASDAQ:INKT), which makes cache software, a neat little trick that stores
popular Web file on computers (servers) in a distributed fashion. Computers
that are closer to users. So one popular file may be available via any number
of servers. The closer to the user/consumer the faster the file transfer (or
so the theory goes). AOL, Microsoft and others use Inktomi's cache. Inktomi
also grows with infrastructure via its search/directory wholesaling
where it
sells software that companies such as Yahoo use to provide search for their
users.
For even in a broadband environment being smart about file and bandwidth use
is necessary. I've seen that as the pipes get fatter the files do also
(similar to how a PC application also got larger as processors got faster).
The Internet is the new processor. Expect its applications and files to
expand accordingly.
Which leads me to a stock that I think may be more undiscovered than
many in
the hype-driven world of stocks: BackWeb (NASDAQ:BWEB). I first saw BackWeb
in early 1996 when company founder Eli Barkat demo'ed it for me on a laptop.
The things I saw in 1996 were (and are) 4 to 5 years ahead of their time in
my view. That puts the deployment for BackWeb's technology hitting its stride
now and in the future.
BackWeb is what I call a "network management solution provider." It allows
corporations to manage and broadcast information and files of any sort (text,
audio, video, applications) across their networks. No this is not
"push," the
media-driven hype of 1997. In my opinion the application of BackWeb's robust
technology is 15% tapped, 85% to go in what it can do. Management led by
Barkat looks solid to me, revenue looks like it may lead the category this
year at near $20 million.
Another sector in the infrastructure arena that I think notable is business
to business, the hands off software-driven plain old boring to look at but
beautiful (potentially) to own: Areba (NASDAQ:ARBA) and CommerceOne (NASDAQ:)
These procurement and eccomerce management software makers strike right at
the heart of the wide business market in the way that EDI did in closed
networks of the past. I think the future of eccomerce is computers
talking to
computers and moving goods and services around. Inventories, ordering,
accounting, procurement, fulfillment, shipping, etc.
While stocks like VerticalNet (NASDAQ:VERT) get too much play in my
view, the
behind the scenes stocks such as the 3 above, are worth my time more.
Services. A more diverse and difficult to define space is services.
Infrastructure services encompass stocks such as USWeb (NASDAQ:USWB),
Verisign (NASDAQ:VRSN), CyberCash (NASDAQ:CYCH), @Home (NASDAQ:ATHM), High
Speed Access Corp. (NASDAQ:HSAC). Of these I look at UsWeb, Verisign and High
Speed Access as the movers of their markets. UsWeb and its merger
partner CKS
provides the outsourced Web presence and marketing that I believe many medium
and large corpoations may look for as the Web becomes a de facto business
expense.
Verisign has the luxury of being the first mover in the digital persona
authentication business and through its deals with the leading Internet
companies has a reach unparalled, a default leader and winner so far simply
through lack of competition and strong allies.
High Speed Access Corp. (NASDAQ:HSAC) offers cable Internet services to
mostly-rural consumer households today. But I am looking at what one of its
investors -- Microsoft co-founder Paul Allen -- is doing with his 'Wired
World' concept (see paulallen.com) and can envision the pieces he's putting
together creating perhaps a broadband Web powerhouse in the next 24 to 36
months. Paul's cable assets are combined the fourth-largest in the U.S. and
he's just filed to offer part of the company to the public. Add in Go2Net
(NASDAQ:GNET), which Paul owns about a third of, stock brokerage Datek, trade
exchange Island, and another handful of Internet investments and Paul Allen
has assembled (or is assembling) what could be a formidable Internet
presence.
All of this rests on the evolution of pure dial up and replacing with always
on broadband, which replaces the layer of dial up hardware, software and
services. So when the broadband comes along you must whip it. More on
this as
the "devo" continues.
________________
This analysis may be shared for non-commercial purposes 100% intact, with
proper copyright and attribution.
Disclaimer: e-harmon.com does not make specific trading recommendations or
gives individualized market advice. Information contained in e-harmon.com's
NetStock! is provided as an information service only. e-harmon.com recommends
that you get personal advice from an investment professional before
buying or
selling stocks or other securities. The securities markets and especially
Internet stocks are highly speculative areas for investments and only
you can
determine what level of risk is appropriate for you. Also, users should be
aware that e-harmon.com, its employees and affiliates may own securities that
are the subject of reports, reviews or analysis in NetStock!.
Although e-harmon.com obtains the information reported herein from what it
deems reliable sources, no warranty can be given as to the accuracy or
completeness of any of the information provided or as to the results obtained
by individuals using such information. Each user shall be responsible
for the
risks of their own investment activities and, in no event, shall e-harmon.com
or its employees, agents, partners, or any other affiliated entity be liable
for any direct, indirect, actual, special or consequential damages resulting
from the use of the information provided.
****************************************
(c) 1999 e-harmon.com, inc.
"for the internet investor"
media queries, email steve@e-harmon.com
****************************************
www.e-harmon.com
____________________________________________________________________________________
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