INTERVIEW-Nationsbanc sees much dross among Net gold
By James Saft
LONDON, May 13 (Reuters) - Internet commerce will come to be
dominated by a few huge winners, leaving many soaring stocks
heading for a fall, Nationsbanc Montgomery Securities' analyst
Alan Braverman said on Thursday.
"I do think there will be at some point an implosion," he
told Reuters in an interview.
"There are 400 (Internet) auction sites out there and I
think there is room for a couple -- maybe five maximum --
winners economically.
"But the rest will not be sustainable. At the end of the day
these folks will change their business plans, get acquired or
implode," said Braverman, in London for a growth stocks
conference.
Braverman believes that the Internet will follow the model
of other media, notably television, and see power and revenue
concentrate in the hands of a relatively small group of players.
U.S. Internet shares have skyrocketed recently, with the
American Stock Exchange Internet <.IIX> index up 240 percent
since early October, and small investors have piled into many
new offerings.
Web software provider Portal Software <PRSF.O> jumped 183
percent on its debut on May 6, two days after online map and
directions provider Mapquest.com Inc. <MQST.O> soared 75 percent
in its first day of trading.
Priceline.com <PCLN.O> has surged to a market capitalisation
of over $18 billion since its March debut, making the
money-losing Internet seller of airline tickets worth more than
profitable airlines such as Delta Air Lines <DAL.N> or British
Airways Plc <BAY.L>.
Braverman, while not naming specific stocks, thinks many of
the recent host of Internet IPOs are of poor quality.
"We are seeing a huge, huge number of Internet IPOs coming
out and not only the quality of the companies, but the quality
of the management and the quality of the ideas are inferior to
what we have seen before," he said.
He said this may not be evident until early in 2000, when
the fledglings will have to report earnings for the first
quarter, traditionally a tough period for Internet firms.
To be sure, many of the dominant Internet firms represent
good value, Braverman said.
"Internet valuations are high but they are based on
reality," he said.
"The main argument for the sector is the secular shift of
consumer time to the Internet and that is a precursor to future
revenues. There are now over 100 million people on the Internet.
It is now a mass market phenomenon."
Braverman currently has a "buy" rating on America Online
<AOL.N>, Amazon.com <AMZN.O> and Yahoo!Inc. <YHOO.O>, among
others. |
