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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: Jerry Olson who wrote (48617)	7/6/1999 11:49:00 AM
From: Teri Garner	Read Replies (1) \| Respond to of 120523

OJ, 1st PSIX target 58 7/16.. Moving up nicely now, great upside potential.

To: Jerry Olson who wrote (48617)	7/6/1999 11:54:00 AM
From: gladman	Read Replies (1) \| Respond to of 120523

OJ - The Street article on ELNK below, it has a couple slightly negative comments but that's 'The Street' in your face style and the article is why ELNK is down today... but not for long. I think ELNK is a great buy at $66, and both AOL & MSPG are up today, ELNK typically tracks with those 2 and should play catch up tomorrow if not today. ARTICLE- When the Gateway-EarthLink talk first surfaced, the initial reaction was one of dismay among PC analysts on the Street. "We believe this transaction would be a disastrous decision on Gateway's part," wrote Warburg Dillon Read analyst Charles Wolf. The Gateway-EarthLink deal could still fall through. Long-distance phone carrier, Sprint (FON:NYSE), which has a 26.5% stake in EarthLink, has the option to buy a controlling interest in the ISP in October 2001, according to EarthLink's proxy filings. Its stake in EarthLink -- now worth around $550 million -- would increase substantially if Gateway acquired the ISP. But according to Sprint's 10-year deal with EarthLink, initated in June 1998, it has 10 days to top any offer made to buy EarthLink. A Sprint spokesman had no comment. Yet, for Gateway, the EarthLink deal would provide it with tremendous opportunity to access EarthLink's 1.2 million subscribers, says Randy Befumo of the Baltimore-based money management firm Legg Mason Fund Adviser. "Nobody explored the potential synergies between Gateway and EarthLink," says Befumo, whose firm has a long position in Gateway stock. He points out that Gateway could save $500 million in synergy costs. The San Diego, Calif.-based PC seller currently loses a few dollars per Gateway.net subscriber. Too Pricey Yet observers are concerned that EarthLink, with a market capitalization in excess of $2 billion, is too pricey. On Friday, EarthLink closed up 4 to end at 67, while Mindspring (MSPG:Nasdaq) climbed 2 3/8 to close at 48 5/8. The takeover frenzy over the past three weeks has pushed up the stocks of EarthLink and Mindspring by about 70%. "A deal goes through and I may be inclined to downgrade," says Warburg Dillon Read analyst Charlie Wolf. "Gateway would be paying $2,000 per subscriber -- it's stupid," says Warburg's Wolf, who says EarthLink currently values each subscriber at only around $200 and pays slightly more than that in marketing and subscriber fees to keep them. Moreover, Gateway's earnings would take a big earnings hit. "A deal goes through and I may be inclined to downgrade," says Wolf, who currently has a buy on Gateway. By acquiring EarthLink, Gateway would end up with an additional 1.2 million subscribers to add to the 400,000 subscribers of Gateway.net. It may need every single one of them. Gateway, which is keen on developing revenue beyond the PC, is anxiously monitoring moves made by Dell (DELL:Nasdaq), the Austin, Texas-based PC direct seller which is launching its own ISP service, Dell.Net, later this summer.