mtnlady and all the following is from the bull-market report, I have known these guys for years now, sometime the are spot on tonight is one of those times. What I mean by saying spot on not in what they say but what they are doing. I think they are real late in worrying about selling off some of the stocks they are selling. I read this just few minutes ago, and it goes right in with what I said about the interent being a joke! This is paid service so I hardly ever re-post anything from them but once in blue moon. They don't mind just so I don't make a habit out of it.
The Bull Market Report - bull-market.com
THE BULL MARKET REPORT DAILY FOR WEDNESDAY, SEPTEMBER 27, 2000
Volume 34, #17
On the Internet, there is no Shortage of Information, but Wisdom is a
Valued Commodity.
To view the newsletter on the web, click here:
bull-market.com
===================================
SPECIAL NOTE: We are going to Vail, Colorado on December 9-10 at the
famous Vail Cascade Hotel and Conference Center for a Bull Market
Financial Seminar. We will talk about gorillas, options, the next
Microsoft and a whole lot more. Please join us for an informative seminar.
The Cascade has their own ski lift and is the town's nicest hotel by far.
Rooms are normally $400 a night, but we have negotiated a $195 rate.
Double-up with a friend if you like and condos are available too. Please
make your plans soon. Come early and stay late; ski and snowshoe and shop
'til you drop and learn which stocks to buy for the new decade.
PLAN AHEAD. All the details are on our web site including a sign-up page:
bull-market.com
[AOL link]
bull-market.com
=========================================
COMMENTARY:
The markets started the day off strongly, but trailed off throughout the
day to close mostly down. The Dow was down fractionally, while the Nasdaq
dropped 0.9% on continued fears over high-tech earnings. Today's earnings
warning came from Priceline.com (see article #4), which helped drag the
shares of most major Internet players lower.
Oracle Corp. (ORCL, $80, unch.) issued some positive comments today
regarding the booming e-commerce market. The company, one of the world's
largest providers of software for information management, said it is
seeing an acceleration of e-commerce investments by large European firms.
The news helped to clear up concerns over possible weakness in the region
after Intel 's (INTC, $44, up 1) revenue warning last week. Oracle is a
member of our B2B Portfolio.
<delete>
If you read anything in today's letter, read article #1 below.
Good investing on Thursday.
Todd Shaver
Editor in Chief
The Bull Market Report
Washington, DC
=========================================
=========================================
IN THIS ISSUE
1. WALL STREET CHANGING ITS TUNE ON INTERNET STOCKS
2. LERNOUT & HAUSPIE EXPLAINED
3. METROMEDIA FIBER OUTLINES EXPANSION PLAN
4. PRICELINE.COM WARNS; STOCK PRICE IS SLASHED
5. 3COM BEATS ESTIMATES
6. FEATURED PORTFOLIO OF THE WEEK -- DATA COMMUNICATIONS
LUCENT TECHNOLOGIES
=========================================
=========================================
1. WALL STREET CHANGING ITS TUNE ON INTERNET STOCKS
There is a change occurring on Wall Street concerning Internet stocks that
have big promise but no income. We have been watching it for months but
have been afraid to admit it to ourselves. We have been fighting it tooth
and nail but we are losing money and we're not happy about it. The
Internet revolution is slowly dying out. What we mean is not that the
Internet has stopped growing. It hasn't. It is still exploding and we
expect to see no letup in this space as audio and video continue to
consume bandwidth and disk space. What we DO see is Wall Street's
impatience with companies that are not making money. Priceline is the
latest example and we discuss this below in a separate article (#4) in
depth.
We are most worried about Amazon. We have been heavy backers of Amazon
(AMZN) ever since we heard about the company in 1998. We added it to our
Internet Portfolio in July, 1998 at $19. We liked the company and
believed in the concept. We watched it go to $80 by the start of 1999 and
then to its all-time high late in the year. And we have watched it drop
from that peak to $30 in late July of this year.
We have gone along with the company line and have been waiting patiently
for them to produce profits. Their 20 million+ customers are propelling
the firm to new highs in revenues, but profits are still elusive. The
latest word from the firm is that this will happen in 2001. There's just
one problem: Wall Street isn't waiting with us. We looked at the stock
earlier today at $38 and said to ourselves that if it hits $34 we are
going to have to sell. By 3 PM the stock had dropped below $35, due to a
weak Nasdaq and the Priceline fallout, but rallied to close at $38, down 2
for the day.
So, we are putting in a GTC stop at $34 and if it hits, we are selling.
We hate to say this, but with $2.1 billion in debt, less than $1 billion
in cash, and losses of $625 million in the last six months, the stock
could trade at the same price Priceline is trading at ($11). Wall Street
has no interest in fast-growing Internet stocks now, so we will have to
realign our portfolios into the conservative Capital One's (COF, $69, up
2) and the Citigroup's (C, $51, down 2) and look for other home-run stocks
to replace the Internet stocks.
We are very concerned about our other Internet stocks in our portfolio.
If what we are seeing continues, there is going to be a bloodbath and we
don't want to be a part of it. Sure, we are long term investors but there
comes a point where the pain is just too great. Below are our pain points:
We are placing GTC sell stops in the following stocks:
RealNetworks (RNWK, $36, down 3) $32 stop.
CheckFree (CKFR, $38, down 2) $35 stop
Exodus (EXDS, $53, down 3) $49 stop
This is painful stuff because the firms are doing so well. Exodus just
hit $69 in early September and CheckFree hit $70 in late July and is
signing up new customers like there is no tomorrow. But enough is enough.
=========================================
=========================================
<deleted>
3. METROMEDIA FIBER OUTLINES EXPANSION PLAN
Metromedia Fiber Network (MFNX, $24, up 2) rose 9% today on the heels of
an upgrade by Kaufman Brothers and positive comments from Goldman Sachs
(GS, $107, down 4). Kaufman Brothers upped their rating on the
fiber-optic firm from Buy to Strong Buy, while Goldman Sachs mentioned
that the stock's recent weakness has created "an excellent buying
opportunity."
In addition to today's news, Metromedia released a statement that detailed
the company's newest plans for its next-generation optical network. The
next phase of the company's $1.4 billion expansion plan will involve the
opening of nine Internet service exchange facilities throughout the United
States and Europe.
COMMENT: Metromedia Fiber is the most recent addition to our Broadband
Portfolio. Metromedia provides high-bandwidth fiber-optic communications
infrastructure to carrier, corporate and government customers. The
company is relatively unique in that it offers virtually unlimited
bandwidth at a fixed cost, as opposed to other firms, which normally lease
capacity on how much bandwidth is actually used.
Metromedia specializes in placing networks in major metropolitan areas.
They have networks planned in 51 cities across the U.S., and they have
plans to replicate this strategy as they move into 16 different cities
throughout Europe. When moving into a new metropolitan area, Metromedia
deploys an extensive fiber optic network in a ring-based system throughout
the city, allowing for complete and reliable coverage of the entire area.
Companies such as long-distance firms, cable companies, ISP's and Web
hosting firms are then able to purchase access to this fiber-optic
infrastructure for a fixed fee. Metromedia now has over 500,000 miles of
this intra-city network infrastructure built, and is currently expanding
into 17 new markets.
But Metromedia's real advantage is not derived exclusively from their
intra-city networks. The company also has fiber capacity across the
nation and to Europe, allowing its corporate customers to integrate remote
locations into one unified network. As businesses expand into global
markets and various locations, access to this unified network will become
critical for business success, and Metromedia will be one of the few
companies able to deliver the goods. The company now has nearly 1 million
miles of fiber optic cable in service throughout the world.
We added the stock last month at a price of $34, and we have a 12-month
target of $50. Although the stock has fallen since our purchase, we are
still very confident that this will be a long-term winner. The demand for
broadband access is going to be huge over the next few years (especially
in metropolitan areas), and Metromedia will be one of the world's key
providers.
We are particularly excited about their move into international markets.
The company recently announced the build-out of a new facility in Dublin,
and expects to be operational in both Paris and Amsterdam by the end of
the year. Metromedia already operates networks in London, Frankfurt and
Vienna.
The company's expansion within various cities is moving along as
scheduled, but they are also working hard to ensure that these diverse
markets are linked together. In order to achieve that goal, and to link
the U.S. with Europe, Metromedia has increased capacity on its
transatlantic backbone by over 400%. It's all part of their $1.4 billion
expansion plan, and we think this plan is going to be a profitable one.
We feel comfortable that Metromedia will meet or exceed estimates for the
coming quarter, and although they are still losing money, there is huge
upside potential in this stock. We think today's big move is a sign of
more good things to come.
=========================================
=========================================
<deleted>
6. FEATURED PORTFOLIO OF THE WEEK -- DATA COMMUNICATIONS
LUCENT TECHNOLOGIES
By Daniel Fisher
Daniel@Bull-Market.com
Lucent Technologies (LU $29, down 2) is well positioned to regain its
leadership in the communications equipment sector. Whether the network is
wired, wireless, local, long-distance, data, or video, chances are Lucent
Technologies is providing parts or services for it. The company has seen
its market cap more than cut in half within the last year, as it traded
from a 52-week high of $84 down to yesterday's close of $29 (a 52-week
low). The current trading level reflects a classic buying opportunity for
the long-term investor.
Today, Lucent announced agreements with China Unicom (CHU, $22, unch.)
totaling $14 million, and Fujian Mobile Communications totaling $8.8
million. Earlier this year China Unicom awarded contracts to Lucent
totaling $50 million. We feel that the current contract award is a stamp
of approval from China's second-largest telecommunications service
provider. Fujian Mobile is the ninth 10G customer Lucent has signed on
since the spring launch of its 'Wavestar' product line. (Lucent's 10G
'Wavestar' system uses a single laser to transmit ten gigabits of
information per second). Fujian Mobile is one of China's first mobile
service providers to build its own transmission networks, and Lucent's 10G
products will give them the ability to transmit one million wireless calls
simultaneously.
On a more local front, Global Crossing (GBLX, $30, up 2) and Lucent have
initiated testing of a high-capacity, all-optical switch that is part of
Lucent's 'Wavestar' product line. Wavestar's All-optical LambdaRouter
uses microscopic mirrors to instantly direct and route optical signals.
This is done without converting signals to electrical form, as in today's
method. The two companies see Lucent's LambdaRouter as a critical
component to Global Crossing's next-generation, all-optical network that
will span the globe by connecting 200 cities on five continents. This
will allow Global Crossing to offer a vast array of services to network
providers. 'Point and Click Wavelength Positioning' may be the most
sought-after advantage of the new LambdaRouter. It allows network
providers to redistribute bandwidth to areas of their network that require
an additional amount. It appears Lucent 's Research and Development
(R&D), and Global Crossing's build-out expenses are both behind them. We
would look for the success of this network to have a positive impact on
BOTH companies' bottom lines.
From a technical standpoint, Lucent is trading below its 10, 50, and
200-day moving averages. Relative Strength, Volume, and Chart Patterns
all indicate this company is not being accumulated. Even so, we take the
contrarian stance on this one, and feel that Lucent is trading at a very
attractive level.
Lucent is developing and marketing great products for advanced optical
networks. It is our opinion that despite the company's depressed stock
price, Lucent has, and will continue to have, cutting-edge communications
products. While R&D costs have recently offset higher sales, it appears
the majority of Wavestar's R&D costs are behind them. This leaves Lucent
in an excellent position to profit from the growth of the world's
next-generation, all-optical networks.
Not convinced? Then we would suggest setting a buy stop in the $35 range.
This would ensure that Lucent was clearly on the right track before you
bought. As for The Bull Market Report, we are buying at these levels.
Editor's Note: In other news, Lucent is all set to spin off its $8
billion enterprise division, Avaya Communications. The new company will
become one of the premier providers of technology for operator call
centers and corporate campuses. The spin-off will take place on Sept.
30th (this weekend) for all shareholders of record on Sept. 20th, and will
be paid in the form of a special stock dividend. Under the terms of the
plan, Lucent shareholders will receive one share of Avaya common stock for
every 12 shares of Lucent that they currently own.
The Avaya unit is involved in the slow-growing traditional communications
business, and Lucent is looking to position itself as a new-age firm
providing equipment to power the Internet revolution. You may wish to
sell these shares on Monday and reinvest in more Lucent shares. We think
you'll be rewarded over the long haul.
=========================================
=========================================
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<deleted>
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