nothing on google, just general but here it is.
DOW JONES NEWSWIRES
August 21, 2006 6:00 a.m.
(From SMARTMONEY)
By Megan Barnett
Internet stocks are back. There. We said it. Queasy? Don't be. True, for the countless investors who rode the Nasdaq's jaw-dropping free-fall in 2001, that concept could be understandably tough to stomach. And we're certainly not advocating a mass purchase of the category. But it turns out that the Internet itself is still alive and well, and so are many of the businesses that took it on the chin during the bust. Broadband use is expanding worldwide at a rapid clip; 72 percent of Web users in the U.S. now have a high-speed connection at home, up from 57 percent last year, according to Nielsen/NetRatings. Forrester Research expects that consumers will purchase more than $200 billion in goods over the Web this year, double the figure three years ago.
More good news: While tech stocks had a disappointing second quarter, Internet stocks still look strong. Meanwhile, the market's retrenchment makes our picks even more inviting. Valuations are the best they've been since tech stocks bottomed in 2002, says Robert Hagstrom, portfolio manager of the Legg Mason Growth Trust fund. "These companies are producing earnings you can get your hands around now," he adds. "It's not about counting eyeballs anymore."
Of course, eyeballs still matter. But today, so do ears and voices. As broadband use has become mainstream, the delivery of digital content like music and video has exploded. What's happening behind the scenes makes for compelling investment ideas: While most people first think of Apple when it comes to the online music business, it's Akamai Technologies you really have to thank for it. Akamai captures the content on its servers and delivers it to your computer -- Apple and Microsoft are two of its big customers. Tara Hedlund, a portfolio manager of the Turner New Enterprise fund, likes Akamai's growth opportunities and the high barrier for others to enter its market. "With more television shows and sports events streaming online, this is a good way to play the growth in traffic," she says. A solid survivor, Akamai stock shot as high as $327 per share in early 2000 before falling to $2.65 in late 2001. It now trades at $33.
Adobe Systems is a software company that owes its success to the Net -- much of the content online would be simply un-readable without it. The company makes Acrobat, the software behind all of those ".pdf" documents you download, and it recently acquired Macro-media, which makes the Flash player that lets you view so many of the images you find online. Even though the software is free to you, the people creating the content and designing the Web pages pay for it. "It would be challenging to create content for the Web without paying Adobe," says Kevin Landis, manager of the Firsthand Technology Leaders fund. Oppenheimer analyst Sasa Zorovic says that the release of new versions of two of Adobe's biggest-selling software packages in early 2007 will drive the stock up 20 percent, to $36, by next summer. Zorovic expects strong demand and that execution won't be a problem. "It's a superbly run company," he adds.
Internet conglomerate InterActiveCorp has its hands in just about everything. Among its online businesses are familiar names like search engine Ask.com, dating site Match.com, Ticketmaster, Citysearch, Evite and LendingTree. The stock trades at 17 times 2006 earnings, compared with the e-commerce industry's P/E of 43. In other words, "it's cheap," says Hagstrom. The market isn't appreciating the complexity of the company, he adds, and commends its chief executive, Barry Diller, for his efforts to change that. As Diller streamlines the company, investors will likely flock to the stock, Hagstrom says. |
