InfoSpace (INSP): Where GNET went! Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : InfoSpace (INSP): Where GNET went!

INSP 90.66

+5.3%

Nov 11 3:59 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Obewon who wrote (12377)	9/25/1999 7:56:00 AM
From: Jeff Dryer	Read Replies (1) of 28311

Obewon, you are very wise... but I disagree with part of your analysis... or maybe we need to develop a 5 year projected revenue and profit outlook for Go2Net here in the forum and discount back and see what happens. Go2Net is a top 10 Web site/Web network in terms of traffic according to Media Metrix. You and I and everyone else either believe in the Internet or we don't. Yahoo is valued at $55 billion because many people believe Yahoo has a business model that can be leveraged better than almost any business model that has ever existed. Yahoo's costs of operation relative to their revenue opportunities is pretty incredible... and guess what... Go2Net has essentially the same business model as Yahoo but started a couple years later than Yahoo. and Dell was at least a couple years behind Compaq once. Who would have guessed in 1993 that tiny Dell would have a market cap 3 times greater than Compaq in 1999. "venture capital firms have been throwing money at Internet companies for an essential cost of capital in the single digits or less." This might be true... the U.S. is flooded with capital. Venture capitalists in Silicon Valley are sitting on billions of dollars and don't have enough opportunities to invest it in... that means expected returns go down. "Added to the strange events that have come together to create the current Internet craze is the abnormally low discount rates that are applied to Internet companies. Usually the risks involved with a company like yours would require a return on equity of 35% or significantly greater as opposed to a relatively stable business like car dealerships which may have a cost of capital of 16%." I don't know if the discount rate argument makes a lot of sense here. What is Go2Net's discount rate factor now? What was the discount rate factor being applied to Go2Net in Oct. '98 before it went up 1376.9% in one year. "It is a fact that most Internet companies will never make a penny in earnings and are therefore worthless from a fundamental point of view." I agree with profitless outlook for most Internet companies... however some Internet companies have significant merger value even without profits... what is the profit outlook as part of another company? That's the big question. Sometimes a company like Microsoft needs to buy their technology or maybe even an online community. Have you seen any Microsoft discussion communities lately? AOL has lots of discussion communities. "Someday, probably when the economy starts significantly slowing, people are going to realize en masse that the earnings can never justify the current price levels and ALL the Internet stocks will get crushed even if they can show earnings. Venture capital firms are going to in turn be burned by their heavy recent concentration in these issues and the supply of equity capital will dry up so fast that the entire economy is likely to tank HARD since the banks are also going to be affected and need to raise the cost of debt capital." I agree with this scenario but only 95% agree. I disagree with the "ALL Internet stocks will get crushed part." I believe many of the Internet leaders will do well regardless of what happens to the Internet sector. Amgen in the biotech sector is doing pretty well even though most other biotechs crashed and burned a long time ago. Go2Net has several unique things going for it that other Internet companies don't have... whether that will make Go2Net a thriving survivor remains to be seen. "That being said, it sounds like she needs to do a little better at explaining her justification of less than $10 rather than just throwing it out into the market." Would you please get a copy of her analysis and share it with us! Since you seem to agree with the "under $10" prediction, Wang might appreciate having a fan. So, thanks for the bearish viewpoint.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next