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Technology Stocks : Internet Guru Discussion
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To: steve harmon - analyst who wrote (4102)2/27/2000 4:33:00 PM
From: Silver_Bullet   of 4337
 
Steve, Can you help me?

I remember reading an article last year that had to do with valuations of Internet companies.

The story went something like this:

A group of guys, who I believe worked for one of the big brokerage houses in NY, were trying to mathematically figure out how Internet companies were being valued. The question was basically: How is the street valuing companies within given verticles/sectors? An example would be Portals like Yahoo, Lycos. or ISP's...AOL, ELNK, RMII. Basically the conclusion was that the street values them logarithmically based on Leadership status. So graphed on a logarithmic chart based on market cap one could see a straight line through the market caps of each company with the leader far outpacing the group. The leader's of a sector will hold a much greater valuation that even the second or third in the same sector. I believe that you can see this in any sector the deals with the net. DSL, Fiber Optic, B2B, Infrastructure and so on. What this says to me is that once the leader is identified it is better to invest in them than the next guy in line. And an investor taking one or two stocks from different sectors for his portfolio should make sure that he has a leader so that he can enjoy the gains.

I would like to find this article again but cant seem to dig it up. I can't remember if I saw it at the Wallstreet Journal online, CNET, CBS Market watch or where.

Can you help?

FT
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