FYI, an article that I thought might have relevance to WEB:
internetnews.com
Investors Overlooking Internet Infrastructure March 3, 1999
Finance News Archives
In their rush to make quick money on Internet stocks, investors may be overlooking some of the firms that show the most promise in providing technologies that makes the Web work, say analysts.
Companies like Verisign Inc., Inktomi Corp. and Infospace Inc., the infrastructure builders for better known Internet players like America Online Inc., Amazon.com and Yahoo! Inc., have as much or more growth potential as their better known counterparts, said analyst Danny Rimer, who follows the Internet infrastructure companies for Hambrecht & Quist.
"Infrastructure on the Internet is a huge, huge area," Rimer said in an interview during the planet.wall.steet Internet conference in Snowbird, Utah.
The companies deliver a range of services from network security to Internet search functions and online traffic management. What they have in common is that their services are critical to the smooth functioning of virtually all consumer Internet sites, and as such, they have strong growth potential.
"These companies are probably a little more sheltered from day traders and retail buyers. But investors are beginning to realize infrastructure as an important theme."
"You can't buy a book on Amazon without Verisign," said Rimer of the company that provides digital certificates to ensure secure transactions. "You can't do a search without Inktomi."
In addition to providing the search technology to many Internet services, Inktomi makes a traffic-serving software that reduces bottlenecks on the Web, and helps ensure people will get through to the most frequently visited sites.
Infospace operates its own consumer Web site, but also derives the bulk of its business from the infrastructure area.
It compiles a range of content from weather reports to hotel listings for Internet services, and is the third party content provider for several leading portals including America Online, Netscape, and Microsoft's MSN.com. As these portals grow, so does Infospace.
Other promising Internet plumbing companies featured at the conference here include Exodus Communications Inc , which hosts Internet servers and has among its clients 26 of the top 100 Web sites; and the network security company Pilot Network Services.
Rimer said these companies have so much value not just because of the services they provide but because of their early entrance into the Internet space and their ability to keep pace with the rapidly changing online landscape. Many of them were formed in the earliest days of the World Wide Web, long before most people even anticipated the need for their services.
"The Internet is dynamically morphing on almost a day to day basis. If you're an infrastructure company, you have to evolve to support not only its growth but its metamorphosis," said Rimer.
One reason these companies are often overshadowed by the Amazons and AOLs of the world is that they are greatly outnumbered. Rimer estimates that 90 percent of all publicly-traded Internet companies are in the consumer space. But he says it is actually the business-to-business sector of the Internet, companies that provide services to other businesses, that will represent 90 percent of the investment opportunity over time.
"Don't get me wrong, they are both huge areas, but business-to-business is ten times bigger than business-to -consumer."
Regards, t. |
