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A Cautionary Tale
By James J. Cramer
2/12/99 12:15 AM ET
Homework can kill you. My younger associate visited Inktomi (INKT:Nasdaq) at the Goldman Sachs conference and got blown away. He wanted badly to put some on the sheets this morning feeling that it was the best story he heard at the conference. He loved the management, thought the story was dynamic and believed that the numbers were too low, despite the loss of the Microsoft (MSFT:Nasdaq) contract. The management even dispelled any of the negatives surrounding that loss. It sounded like a real live Net play that would work on a rebound.
But there was a problem.
Novell (NOVL:Nasdaq) has been walking around claiming it has some sort of Inktomi-killer, some device that will put the fear of Hades into Inktomi shareholders. Sounds like some sort of doomsday search engine.
So my young associate said before we could buy Inktomi, we had to see what Novell had to say, and Novell wouldn't be speaking till later.
I had a hankering for this Inktomi because Roger MacNamee said he loved these guys.
(Some cynic emailed me and said, What else would Roger say? He's an original backer and shareholder. I immediately shot back that there is a level in this business where you don't tout and you don't bag. Where your reputation is too highly valued. Roger is in that league. He would never mention Inktomi to me or anyone if he thought it stunk, even if he were long. His currency is his insight; he will not debase it.)
But my associate said we have to wait. He had to see Novell. Sure enough, Inktomi opens at $59 and then proceeds to trade lower.
Points lower.
Have to wait to hear Novell.
Then it starts ramping with the rest of the Net.
Nah, gotta hear those folk from Novell.
Now it is up six, Novell meeting breaking up.
Then seven. Then eight.
Wouldn't you know it: When my associate calls, Novell, he says, has nothing, nothing to worry about.
Inktomi's up 10 when I get the call.
Even on the Net that's too late.
Only on the Net does dotting the Is and crossing the Ts cost you hundreds of thousands of dollars.
In a morning. |
