Hi Marty ... Even our very own Silicon Investor is in the news now.
P.S. Next time you're in Honolulu, make sure you go Sarento's Restaurant at the top of the Ilikai Hotel. Excellent.
Regards,
Phil
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November 13, 1998
Internet Mania Hits the Nasdaq
As Parvenu Stocks Take Flight
An INTERACTIVE JOURNAL News Roundup
If there can be such a thing as parvenu Internet stocks, they're here -- and the ostentation of their market run-ups has left even those jaded by weeks of Internet mania shaking their heads.
Technology stocks endured a roller-coaster day Friday, finishing down
slightly as weakness for Dell Computer Corp. left the Nasdaq Composite
Index with a slight loss, but some of the newest Internet stocks were flying high.
Shares of Go2Net Inc., a metacrawler service for the Net and owner of
the popular Silicon Investor (www.techstocks.com) stock-discussion site, surged $9.75 to $39.25, slipping off day's peaks that were nearly twice as high. The company late Thursday reported a fourth-quarter operating net profit of two cents a share, compared with a nine-cent-a-share loss in the year-ago quarter.
"These days anything related to the Internet with a whiff of profitability is a pretty hot commodity," said Needham & Co.'s Dalton
Chandler, the sole analyst following the stock. "They reached profitability two quarters ahead of my estimates."
Mr. Chandler had expected the company to report a loss of five cents,
excluding one-time items.
Go2Net Chief Executive Russell Horowitz attributed the strong earnings to the company's technology and user-driven sites.
Go2net's sites are based on a software model that allows them to basically run themselves, Mr. Chandler said.
"Their sites are highly automated and low maintenance so they have a
cost-structure advantage over other companies doing the same things," he said. "Because of that advantage, the company exceeded my revenue
estimate for the quarter and that pretty much all fell to the bottom line."
Go2Net spent about $1.3 million on sales and marketing in 1998 and has
relied primarily on word of mouth to make its combined sites the 28th
most trafficked on the Internet.
Shares of Web-site developer EarthWeb Inc., meanwhile, took a step
back, slipping $2.25 to $67 on Nasdaq. But don't cry for EarthWeb's
newly minted rich -- after all, the shares climbed 41% Thursday and
closed Wednesday at $48.6875 after pricing that same day at $14 a
share.
Then there was another Web site IPO, theglobe.com Inc., which priced at just $9 but shot as high as $97 before falling back to end at a
still-remarkable $63.50 on Nasdaq.
Don't forget Globix Corp., whose shares shot up $4.3125 to $11 as the
company finally got a lift from the Internet-stock explosion.
"The stock price hasn't appreciated much," compared with its Internet
brethren, said ING Baring Furman Selz LLC analyst David Levy, "and
now it's making up for lost time."
The stock hovered around its 52-week low of $4 for much of October
and November, until investors took notice Friday, the analyst said. Earlier Friday, the shares traded as high as $13.9375.
A person familiar with the company said some investors are expecting
Globix, a provider of equipment and training to Internet businesses, to issue a "major" announcement on Monday or early next week. "I've gotten calls from several people expecting a large announcement,"
said Globix spokesman Dan Vene. He could neither confirm nor deny the
speculation, and declined to elaborate on what the announcement might
be.
What else was there? How about shares of Greg Manning Auctions Inc.,
which climbed $2.5313 to $13, building on a 102% gain Thursday.
Jim Smith, chief financial officer of Greg Manning, had a pithy explanation for the frenzy Thursday: "The Internet seems to be the magic word."
The only apparent break in the madness Friday came with the Nasdaq
Stock Market's continued halt of shares of AvTel Communications Inc., a California company whose shares charged ahead an astonishing 1,278%
Thursday, soaring 28 3/4 to 31 after the company said it was launching high-speed Internet access.
After-market players continued to bid up shares of AvTel during late
trading Thursday, prompting Nasdaq to halt the stock at 5:40 p.m. EST
while it awaited additional information from the company.
Late Friday, the Nasdaq Stock Market said trading in AvTel's shares will resume Monday morning.
Many analysts have viewed such otherwordly run-ups -- particularly when they've come for the likes of K-tel International and Zapata -- as symbols of the wretched excesses of the bull market's obsession with highly speculative Internet stocks.
Lise Buyer, an analyst at Credit Suisse First Boston, said Thursday that Internet stocks also tend to become supercharged on the tiniest bits of news because of their limited floats or amount of tradable stock.
But not everyone is willing to write off the stock spikes as total lunacy. Jennifer Klein, an analyst at Deutsche Bank Securities Inc., said Thursday that the opening an Internet business can present dramatic new opportunities for a company. "It lets them go from being a small retailer and a local auction house to being a more global entity," Ms. Klein said. |
