Maybe that's why the price is droping!!!!
WALL STREET ARTICLE
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DJN WSJ: Heard On The Street: Name Of Company Can Make Stk Soar
Mar 2 1999 20:58
By John R. Emshwiller
Staff Reporter of The Wall Street Journal
The name is the game on Wall Street these days.
A growing number of small public companies are finding that
adding ".com" to their name can send their stock soaring. For
investors, however, these volatile highfliers pose some particular
risks. Many have little or no current operations and don't file
financial reports with the Securities and Exchange Commission.
And often, the trading pop soon at least partly fizzles.
Take MIS International. Until January, this largely dormant
little outfit traded on Nasdaq's OTC Bulletin Board (for stocks
that don't qualify for Nasdaq itself) with daily volume as low
as 2,000 shares and a price generally well south of 50 cents a
share. The company then acquired a new Internet-oriented business
plan and a new name, Cosmoz.com.
Presto! Trading volume rocketed to as much as six million shares
a day and the price briefly hit $5, giving Cosmoz.com a market
value of $200 million. Its price has since dropped back to about
$2.
Not too shabby for a company that hasn't yet turned a profit,
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and whose only operating business so far is a recently purchased
financial-markets-information Web site that generates about $200,000
a year in revenue. However, Cosmoz.com does have a "hip" and "catchy"
name that "definitely contributed" to the recent stock-market
interest, says Wilfred Shaw, chairman and chief executive. He
adds that Cosmoz.com has plans to acquire "many Internet companies."
The experience of Cosmoz.com and others suggests that at least
part of the long-running bull market isn't so much tottering into
the future as "dottering" there. A Wall Street Journal computer-assisted
survey found that more than 40 public companies now use ".com"
as part of their names. These companies' shares often blossom
during the metamorphosis, an analysis of the survey shows.
Though not commenting on a specific company, Nancy Smith, director
of the SEC's investor-education office, advises, "Don't invest
by just a name. That is asking for losses."
More than 30 of these dotters are found on the bulletin board,
home to more than 6,000 mostly little and little-known companies
scrambling for attention. A number that have taken the dot-com
label in the past several months have seen big subsequent gyrations.
These moves are fueled at least in part by rapid-fire Internet
"day traders" scouring stock chat sites looking for hot new plays.
A few of the names are famous, such as Nasdaq-listed Amazon.com.
But most aren't. For instance, how many people have heard of BoysToys.com,
an adult-entertainment Internet company? (Perhaps more than when
it was named Alternative Entertainment.) One company, U.S. Amateur
Sports, was chagrined to find Ecom.com used, so it went one better,
changing its name to ecom ecom.com.
PinkMonkey.com in Liberty, Texas, an Internet seller of educational
materials, went public in June when it merged with a bulletin-board
company called North American Natural Resources and dotted the
deal with a name change. Investors apparently didn't pick up on
the new identity until the company put out a news release on Nov.
30 in which it pronounced that PinkMonkey.com was "poised to become
the Amazon.com of the educational study-aid market."
Within a few days the stock jumped to $17 a share from about
$1 on surging volume. Indeed, so frenzied was the stock move that
a few days after the first news release, the company put out a
second one, noting the firm's shortcomings. These included "limited"
cash and assets, "nominal" revenue and expectations of "operating
losses for the foreseeable future." The company's shares currently
trade at about $2.
Pat Greene - who describes himself as PinkMonkey.com's chairman,
chief executive and "head monkey" - says the second release was
a sort of "whoa, boys" to a market whose appetite for Internet-related
issues has been such that "you could name {a company} smelly.com
and it would go to 50."
That's not a bad description for some dot-com companies, critics
say.
Until he finds out otherwise, "anything that is dot-com I consider
a dot-con job," says Anthony Elgindy, a San Diego-area trader
and short-seller. (A short-seller bets against stocks by borrowing
shares and selling them, with the aim of replacing them at a profit
if the stock's price falls.)
In January, the SEC temporarily halted trading in the shares
of USA Talks.com, a La Jolla, Calif., Internet telephone-service
company. USA Talks.com was born last summer out of the merger
of a private company and a bulletin-board stock called SBB Inc.
USA Talks.com's stock price subsequently rose to nearly $16 from
about $1, giving the company a market value of $1.5 billion even
though it didn't yet have any revenue. When it was suspended on
Jan. 29, it was trading at $13 a share.
USA Talks.com Chairman Allen Portnoy says the company believes
it has put out adequate public information and is working to get
its shares back onto bulletin-board trading. An SEC official declined
to comment on the matter.
Millionaire.com, a Hilton Head, S.C., magazine publisher and
auction company, was created in December out of a bulletin-board
company called Charter Investor Relations of North America Inc.,
according to President Robert White. Within three weeks, Millionaire.com's
stock price rose to $27 a share from about $4, giving the company
a market value of over $300 million.
In late December, an article appeared in an online news operation
called Stock Detective raising questions about Millionaire.com
partly because its investor and public relations were being handled
by a Longwood, Fla., man who had a run-in with the SEC. Early
last year, Steven Samblis was sued by the SEC in an Orlando, Fla.,
federal court for allegedly portraying himself as an independent
stock picker when he was actually being paid by companies. Mr.
Samblis says he thought he had made adequate disclosure and agreed
to an SEC injunction to avoid the cost of litigation. Millionaire.com's
Mr. White says he doesn't believe Mr. Samblis did anything wrong.
Millionaire.com fell sharply after the article and currently
trades at about $7 a share.
Stock Detective is owned by an Altamonte Springs, Fla., Internet
company that up to early December called itself Axxess Inc. Then
it changed its name to FinancialWeb.com to "more accurately reflect
the company's core business," says a news release. Within about
a month, company shares on the bulletin board rose to over $27
a share from about $8. The stock currently trades at about $16 a share.
Kevin Lichtman, FinancialWeb.com's chairman, says the name
may have helped. But he mostly credits the company's business
activities. His company, he adds, is a real dot-com company -
not just "another dot-com wannabe."
(END) DOW JONES NEWS 03-02-99 |
