Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Jan Crawley who wrote (68654)	7/22/1999 4:37:00 PM
From: Glenn D. Rudolph	Respond to of 164684

UK funds click on Freeserve, but plan short stay By Andrew Priest LONDON, July 22 (Reuters) - Strong institutional investor demand and a scarcity of stock will ensure a hefty premium for Freeserve when it debuts on Monday, but big funds are targeting short-term gains, fund managers said on Thursday. Britain's biggest electrical retailer Dixons <DXNS.L> is selling off just one-fifth of its no-subscription Internet service provider for 130 to 150 pence a share, giving a pool of just 229 million pounds to 264 million pounds of stock supply. Fund managers said Freeserve IPO roadshows had attracted strong interest from specialist investors as well as major institutions and the issue looked to be well supported by large funds as well as retail investors. "Demand among fund managers is likely to be very high. There is a fear and greed mentality in this issue as the free float is so small and it is split between London and New York," said Chris Bell, fund manager of Framlington Group's NetNet fund which invests in Internet stocks. But most big investors contacted by Reuters said they planned to be short-term holders of the stock. "Freeserve's time window is running out and that will be a big issue for funds after the initial euphoria has died down," said the head of technology investment at a major London investment firm who said he planned to subscribe before Friday's institutional deadline. Institutional investors said their appetite for Freeserve was partly motivated by a desire to ensure continued strong performance in Dixons shares, which have more than doubled since Freeserve's launch last September. Dixons, with a market capitalisation of 5.7 billion pounds, plays a bigger part in most funds' portfolio performance, fund managers said. "It's basically a play on Dixons. Clearly there's some pretty big holders of Dixons out there and they can simply drive the Freeserve price to help the Dixons share price," said one fund manager at a major London-based investment firm. The shortage of Freeserve stock means most large fund managers will receive only a tiny allocation, virtually meaningless in multi-billion pound portfolios, said one institutional investor who said he planned to subscribe to the issue. "It's clearly going to go quite well but the success is just a supply issue. If it had been a billion pound issue it would have been as flat as a pancake," he said. A growing recognition among institutional investors that a portion of their assets must be invested in Internet businesses has sent shares in the handful of British technology, media and service sector companies which have connected businesses soaring this year. But there will be better opportunities to buy good Internet companies in coming months, said the head of technology investment. "Freeserve is the kind of company you would expect to be listed at the end of the run in Internet stocks not at the beginning. You would expect the quality ones to come first," he said. Although Internet usage has ballooned across the United States and is increasing in Britain and continental Europe, many investors question the ability of Internet companies to produce the level of profits that rapidly rising share valuations demand. Freeserve, launched last September, swiftly became the UK's top online firm by scrapping the subscription fee for Internet connection. It relies on a share of connection charges, plus e-commerce and advertising, generating revenues of 2.73 million pounds to May and making a net loss of 1.04 million. Although still the UK market leader with 1.3 million users, Freeserve now faces rivalry from 70 to 100 "free" competitors, including America Online <AOL.N> which has 20 million subscribers worldwide. Framlington's Bell said Freeserve had the potential to produce long term success if it made the transition from being a free Internet entry point to an integrated portal site, able to benef...