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To: Bo Didley who wrote (57971)	8/27/1999 1:27:00 AM
From: Susan G	Read Replies (1) \| Respond to of 120523

Why Fears of Higher Long-Term Rates Whack Net Stocks Wednesday August 25, 1999 (4:02 pm ET) Short-term interest rates don't affect the costs of investment-light Net companies. But over the long term, higher rates could erode Web profits By Sam Jaffe, Business Week Online Street Wise NEW YORK, Aug. 25 (Business Week Online) - When Alan Greenspan and the Federal Reserve announced on Aug. 24 that they were hiking a key short-term interest rate by one-quarter of one percent, chief financial officers of major corporations called their spouses to say they'd be home late. Bonds would have to be revalued. Commercial paper would have to be reissued. And the financial models underpinning the companies' business strategies would have to be rejiggered. New factories that were to have been financed might have to wait because the cost of borrowing money just went up. Earnings projections would have to be reviewed now that a company's costs were rising. In other words, the financial landscape surrounding their companies just changed. In Web land, however, things were calm. John Hashman, the CFO of NextCard Inc (NXCD), an Internet credit-card company, was on vacation. Yahoo Inc (YHOO) CFO, Gary Valenzuela, left the office early. And Network Solutions (NSOL) CFO Robert Korzeniewski decided to schedule Tuesday as a travel day. Why? "A slight increase doesn't have any impact on us," says Korzeniewski. That certainly seems true for short-term rates. After all, hardly any Net companies have much debt. They finance their operations almost entirely by selling chunks of equity, whether through an initial public offering or by selling stakes to corporate partners. That's because equity capital in the Internet market is so incredibly cheap. If investors are willing to pay a price-to-earnings ratio of 1,019 for Yahoo!'s stock, you better believe that Yahoo! is going to raise funds by selling off stock rather than issuing bonds or borrowing from banks. In such an environment, interest rate fluctuations become irrelevant. No inventories Another factor is that Internet companies have few bricks-and-mortar assets to worry about. "If you're General Motors (GM), you know that if rates rise, you're going to have to somehow cut down on capital spending in the future," says Rich Yamarone, the chief economist for Argus Research. "But what are you going to cut back if you're an Internet company? Web pages?" Indeed, most Internet companies don't build factories or carry inventory or buy fuel. The only thing they have to manage is growth in traffic, which so far has proven immune to rate rises. Take NextCard, for instance. Fewer businesses could be more interest rate-sensitive than a credit-card company. Yet Greenspan could have jumped off the Washington Monument and it wouldn't have mattered to this company. "The rate hike will have zero impact on our operations," says Susan Weinstein, NetCard's vice-president for investor relations. "People tend to spend the same amount of money on their credit cards whether rates go up or go down. All that matters to us is that we're acquiring new customers, and we're doing well in that area." Such confident talk belies the fact, however, that long-term rates do make a difference to Net companies -- a big difference. Although few Web stocks were affected by Tuesday's hike, that's because they had already been pushed down by the economic news that preceded the increase and forced the Fed's hand. Inflationary pressures started showing up in the producer price index and employment figures in the early spring -- right about when Internet stocks began their nosedive. For the previous two years, hardly anything had fazed Net stocks. But when fears of a rate hike began to waft through the markets, the Achilles' heel of the Internet sector showed itself. Blissfully ignorant The problem is simple: "If a company is expected to show a lot of profits in the future, the value of the money earned is going to be important," says Neal Soss, the chief economist for Credit Suisse First Boston. "If rates go up, that means the value of that future money has just gone down, which means that the company will earn less in real terms." Of course, Net-stock investors were supposed to be blissfully ignorant about such things as earnings. For the past two years, the rallying cry of analysts has been: "Who cares if they don't make money today? Tomorrow, they're going to be the next Microsoft." But if rates go up and keep rising, by the time Web startups become the next Microsoft their profits won't be worth as much as they were expected to been just yesterday. Thus has the twisted logic of Internet stocks thrown investors for another loop. The fact that interest rates have little effect on the way these businesses operate should mean that rising rates wouldn't hurt their stocks. But then again, it has been some time since the valuation of Web stocks made much sense. So why should their reaction to interest rates? 25-Aug-1999 16:02:52 (02201922) Copyright 1999 Standard & Poor's Investment Advisory Services LLC. The information contained in this report may not be published, broadcast, rewritten or otherwise distributed without prior written consent from Standard & Poor's.

To: Bo Didley who wrote (57971)	8/27/1999 7:46:00 AM
From: kendall harmon	Respond to of 120523

ACTIVETRADERS--Bo, I am, albeit very indirectly. I recommend that you access it using MIRC if you want to because it is easier on the computer screen and the eyes. It is a very fast paced day trader oriented discussion, which, along with #Daytraders, is one of the more popular MIRC daytraders rooms (there are a huge number of these, one guy I corresponded with monitors 8--eight--at one time! Made me tired). Comments: (1) There are some good ideas generated, although you have to watch for them. (2) You cannot beat the price (free). (3) You can do a mirc chat individually with any member of the room while the room is open (this is a major reason to use it in its mirc version). There are some good traders in there whom I have "met" in other settings. (4) Many follow one of the key traders there, "Cheetah," so when he calls something others pile on. He has his own website which has some information on it I found interesting. I find his ideas to be uneven in value and I do not always get the impression that others evaluate them before they jump. (5) There is pump and dump galore, which I deplore but is just part of the wild world of cyberinvesting. People will buy a stock and then cross post to there and other SI and net locales and you can see many quick up and down moves as a result. You will recognize a number of Si names, such as Alientech and Ladynada, in there, especially from the tokyomex thread. In sum, a hurly burly, fast paced day trader focused room, with lots of tv based and news flash based plays. You need to be able to sort through the noise to hear an occasional valuable sound, and you will rarely see a reference to a cup and handle break out, a medium term earnings improvement, or an exciting managment team. Kendall.

To: Bo Didley who wrote (57971)	8/27/1999 9:11:00 AM
From: werefrog	Respond to of 120523

#activetrader is a mIRC channel with about 1000 daytraders logged on each day. I've been using mIRC daytrader channels for a couple of years and log on every day at market open and log off at market close. Yesterday I played BAMB, GRIN & MDCM making over 6 points easily and taking a 1/2 point loss in IMGX. When certain people I have learned to trust over time post a buy I just buy it immediately, not even knowing the name of the company sometimes. It is a "FREE" service and if you are new just 'LURK" it a while until you see what's going on. Cheers