Interesting commentary from today's TSC
From: thestreet.com
In May: America Online (AOL:NYSE) reports on May 6 after the close. The consensus is for 12 cents a share, but Meeker believes that as of right now there may be some upside based on its expanding membership base of almost 14 million.
From: thestreet.com
Internet stocks, depending on whom you talk to, are either the opportunity of a lifetime or a short's dream come true.
Now comes earnings season for these mo-mo plays, time to prove to investors that they can actually make money. Yeah, that's right, many of these Internet stocks don't even make a profit. That lack of dash makes even some of the more aggressive growth managers wary of this highflying group.
"Our policy here is that if a company doesn't make any money, than we can't invest in them," says Jim McCall, who helps manage three PBHG funds and has a small holding in America Online (AOL:NYSE), which broke into the black one year ago.
According to many market watchers, Internet stocks have started to trade at multiples that would make sense in terms of future earnings. But among Internet stocks, investors are discussing not this year's earnings, or even next year's. They're talking about earnings that might not arrive in strength for three more years.
The faith in future earnings, especially in terms of the more distant future, is always dangerous because it doesn't allow for speed bumps. The economy could slow, inflation might take off, or some corporate misstep might derail the company's growth.
Some Internet investors have decided that the future is in fact hard to see. Many bellwether Internet stocks are off almost 10% from their end-of-March highs, leading the sector into what could easily become a nasty first-quarter earnings period.
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One note to consider before investing in this group: Insider selling. In late February, more than 10 insiders sold AOL stock, nine sold Excite positions and 12 insiders sold Yahoo stock. Of course, at these prices, wouldn't you?
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