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To: Tom D who wrote (63418)	6/19/1999 7:39:00 PM
From: KeepItSimple	Read Replies (1) \| Respond to of 164684

>I suspect you are even lying about the ability to doctor a trade confirmation > slip in "5 seconds". Hello? Cuting and pasting letters/numbers in photoshop takes no time at all. Ok, maybe it would be more like 5 minutes.

To: Tom D who wrote (63418)	6/19/1999 9:00:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Article 1 of 200 FORTUNE Investor; The Wired Investor Fleeing the Net? Try Plain Old Tech THERE WILL ALWAYS BE A NEED FOR CHIPS Adam Lashinsky 07/05/1999 Fortune Magazine Time Inc. Page 208+ (Copyright 1999) So you're understandably tired of being harangued about how Internet stocks are the wave of the future and you have to own them-- especially after the likes of Amazon , CMGI, and Yahoo have been hammered down for the past two months. (For a related view on Net stocks, see Street Life.) The faint of heart will want to wash their hands of these losers tout de suite. Even the brave but prudent are probably inclined to take a breather while interest rates get sorted out. But only a financial Luddite would conclude that it's time to bail out of tech stocks completely. If you're looking for tech-oriented ideas that have no taint of the Internet, however, fuhgeddaboutit. The bad news is that every tech company--not to mention every nontech company--is obsessed with the Net. The good news is that this obsession translates into an urgent need to build a Net infrastructure. And the Net's construction workers are real, money-earning companies. In some cases you don't even have to ditch your "valuation bias" to own them (see "How Yahoo Became a Blue Chip," June 7, in the fortune.com archive). "Regardless of what happens to valuations, Cisco will still sell $1 billion of routers over the Internet," says Andrew Sessions, an investment banker with Thomas Weisel Partners in San Francisco. Adds David Readerman, chief of Weisel's Internet research: "We are beginning a secular bull cycle for Internet infrastructure spending from both ends of the spectrum--'dot.coms' that want to spend on information technology to gain market share and bricks-and-mortar businesses that know they need to 'Webify' in order to compete." Take Merrill Lynch, which recently unveiled plans to offer online stock brokerage to all its customers. Merrill has already spent $825 million on a network to connect its brokers. Now, over this year and next, it will make another "nine-figure investment" to implement a three-pronged Internet strategy that also includes services for institutional clients and a global expansion, says chief technology officer John McKinley. Who benefits from this sort of spending? Component makers like Cisco, whose routers guide information around corporate networks. Other beneficiaries are the few independents that make equipment for linking voice and data networks. Among them: Newbridge Networks, Ciena, and Fore Systems. Even better, consider all the semiconductors that will be needed for this network construction, particularly for the large public networks being built by non-Bell phone companies. Clark Westmont, who follows communications-oriented chips for Salomon Smith Barney in San Francisco, says the manufacturers that supply these multiyear, multibillion-dollar projects will have virtual annuity streams. "The barriers to entry are very high, and demand cycles are very long. The component companies that are designed in today are clipping coupons," says Westmont. He recommends chipmakers like Vitesse Semiconductor, Applied Micro Circuits, and PMC-Sierra. Vitesse, for instance, earned $63.5 million over the past 12 months on revenue of $227 million. Its stock continues to trade near its 52-week high of $59, up more than threefold since October. That's a pricey 75 times earnings. But Wall Street expects its earnings to increase 30% to 40% a year into 2000. "There's real earnings there and real growth," says Westmont. "It's expensive but a little more rational" than buying profit-free Internet companies. The other obvious place for tech investors to watch is enterprise software companies, which supply sophisticated packages to help big businesses run their operations. These projects quickly became dispensable late last year when client businesses shifted their software spending toward fixing Y2K problems and ramping up Internet capability. Y2K will pass, however, and the nimblest software companies are already retooling their offerings for Internet applications. Patient investors (do they still exist?) should begin considering which enterprise software companies will start to rebound toward the end of the year. Charles Phillips, the lead enterprise software analyst for Morgan Stanley Dean Witter in New York, doesn't see the group he follows recovering quickly, but he notes that "valuations seem to have bottomed out, and the risk of buying near term is mostly opportunity cost." If you're interested in applications vendors--say, PeopleSoft or Oracle--he says there are "slim pickings" right now. However, he likes systems-management companies such as Computer Associates and BMC Software. Storage software also is trendy, largely because of the need to store information going out over public and private networks. Veritas software is one of Phillips' picks. In short, tech investors can't escape the Net right now, any more than the pre-Internet Age companies that wish it would go away. But those placing bets for the 12 months ahead can at least stay focused on the part of the Net that actually makes money and the sectors most likely to revive when Y2K simply becomes next year. ADAM LASHINSKY is the Silicon Valley columnist for TheStreet.com. You can browse his Wired Investor columns at www.fortune.com/investor/wired or e-mail him at alashinsky@thestreet.com. Quote: WHEN NET STOCKS BLOW UP, THE FAINT OF HEART MAY WANT OUT OF THE SECTOR FAST. COLOR PHOTO: PHOTOFEST