Found on RB:
LEH virtual econ includes CMGI
Sorry if this was already posted. Got this from the RFMD board.
11:18am EST 29-Nov-99 Lehman Brothers (Jeffrey M. Applegate
(212)526-4585) Introducing the Lehman Brothers Virtual Economy
Portfolio Part I
[FirstCall Notes ú Rcvd: Nov 29, 11:30 AM EST ]
Today's Date : 11/29/99
Highlights:
* In this report, we introduce our Lehman Brothers Virtual Economy portfolio.
* Like our traditional U.S. Strategy portfolio, this portfolio includes
stocks of established, physical economy companies that are increasingly
involved in building and servicing the burgeoning virtual economy.
* The virtual economy grew by nearly 70% last year, fourteen times the growth
rate of the global physical economy. As the Internet bandwidth improves and
as access evolves from the PC-based model, the growth rate of e-commerce
could well accelerate.
* Some of the companies involved in creating this new economy should present
fertile opportunities for equity portfolio investment.
* The Lehman Brothers Virtual Economy Portfolio is our attempt to identify
some of those companies and participate in that growth.
------------------------------------------------------------------------------
Summary:
In this report, we introduce our Lehman Brothers Virtual Economy portfolio.
Like our traditional U.S. Strategy portfolio, our Virtual Economy portfolio
includes stocks of established, physical economy companies that are
increasingly involved in building and servicing the burgeoning virtual
economy. However, unlike our traditional portfolio, most of our Virtual
Economy portfolio consists of new virtual economy companies. As such, the
portfolio is not organized along the lines of traditional economic sectors.
Rather, stocks in the portfolio are in one of four sequential architectural
layers: Infrastructure, Application and Service, Intermediary, and E-
Commerce.
The Chairman of the Federal Reserve Board has observed, "The way America does
business.is in the midst of a significant transformation". We couldn't agree
more, except that it's not just the United States; it's the planet. The
global secular substitution of real economic activity by virtual has, we
think, barely begun. The stocks in our Virtual Economy portfolio are those
that we believe possess the characteristics for market dominance and,
consequently, potential returns in excess of normalized equity returns. In
this report, we identify the trends that we think will predominate as the
Internet evolves, review our investment methodology for selecting sector
weights and stocks, and establish a portfolio that satisfies our qualitative
and fundamental selection criteria. As active managers, our goal for this
portfolio is to land somewhere on the capital markets line between the S&P
500 and the Dow Jones Internet Index.
The Dow Jones Internet Index is currently the most appropriate benchmark for
active Internet managers. Please refer to Lehman Brothers' equity
derivatives report, Review and Ranking U.S. Internet Indices, October 15,
1999.
The Lehman Brothers Virtual Economy Portfolio
Infrastructure Layer
Brocade Communications BRCD $297 NR
BroadCom BRCM $192 _ NR
Cisco Systems CSCO $88 1/2 1
EMC EMC $88 1/2 1
Intel Corp INTC $79 1
JDS Uniphase JDSU $238 NR
Juniper Networks JNPR $294 NR
Lucent Technologies LU $76 3/8 1
NextLink Communications NXLK $53 7/8 1
Qwest Communications QWST $35 7/8 1
Redback Networks RBAK $142 ® 3
RF Microdevices RFMD $63 ® NR
Sun Microsystems SUNW $127 1/8 1
Tellabs TLAB $73 ª 1
MCI WorldCom WCOM $87 1/16 1
Application And Service
BroadVision BVSN $109 5/8 NR
Critical Path CPTH $63 3/8 NR
Exodus Communications EXDS $123 9/16 1
Infospace.com INSP $92 5/8 NR
Microsoft MSFT $89 5/8 1
Phone.com PHCM $147 1/16 NR
Razorfish RAZF $68 _ 1
RealNetworks RNWK $161 ® 1
Scient Corp SCNT $129 _ 1
Siebel Systems SEBL $70 43/64 NR
Intermediary
Ariba ARBA $192 _ NR
CMGI CMGI $137 9/16 NR
Internet Capital Group ICGE $170 1/8 NR
VerticalNet VERT $94 5/8 1
E-Commerce
America Online AOL $84 ª 1
Amazon.com AMZN $81 _ NR
EBay EBAY $167 9/16 1
Priceline.com PCLN $61 15/16 NR
Yahoo YHOO $221 3/16 1 |
