HO-MEE,
I also don't understand the upgrade of JWEB based on free ISP. Perhaps very early in the development of a market where one must convince customers just to use the technology/service etc. As the market segment matures, however, people will gravitate to those products or services which provide them the best "fit" for their needs. There are several companies offering free ISP now competing for those future eyeballs.
I find similarities in the network vs. cable TV industry. The cable industry has been successful in maintaining high fees despite the fact that network broadcast TV is "free" (due to ad revenues/eyeballs) because they provide the content that consumers desire. I choose to pay the cable fees because for me it is a relative good value. AOL has survived despite rising monthly charges because, in addition to many other things, they have successfully developed a community and set of services that make it a better relative value for some subscribers than other less expensive services. GNET as well has provided a distinct community and set of services that people are willing to pay for...SI, hypermart revenues etc. Rich content, customization and unique features will separate the leaders from the laggards over the coming year.
It seems that the competition in this arena is significant and I am not aware that JWEB offers anything different from a dozen other ISPs. As internet companies mature and burn the IPO dollars, I imagine that advertising dollars will be spent more judiciously. Those companies showing steady, growing, traffic that stays on the site, showing the appropriate demographic data will attract more ad revenue.
Amazon was able to promote the business-at-a-loss model because they were the first mover in the market. They hit early and hard acquiring an enormous number of customers because there was little competition. Critical mass is a beautiful thing. How they progress to profitability from this point remains to be seen.
The move made by the Paine Webber analyst in doubling the JWEB price target to $120 seems optimistic when greater losses are expected. Increased revenue, an alternate measurement of success in the internet valuation game, from the anticipated new eyeballs will most likely be at least 4-6 months down the road(Increased subscribers---increased MediaMetrix numbers--increased advertisers---actually collecting ad dollars---quarterly reporting). I expect losses to widen just when investors are becoming less tolerant of more red ink i.e. CNET.
I'm glad that Stuart Varney of Moneyline emphasized the profitability of GNET. Russell and Co. have created a tremendous network by selectively weaving together specific acquisitions for specific purposes....all with virtually no advertising. This guy seems to know the value of a buck. It is these traits that will ensure that GNET not only survives but flourishes in the future.
HeatherN |
