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To: Fred Fahmy who wrote (87754)	9/4/1999 4:18:00 PM
From: puborectalis	Respond to of 186894

Aug 3 1999 9:53AM ET "In 1994, I wrote a 10-year forecast for digitally delivered music via the Internet and I continue to hold the view that as much as 10% to 15% of all music distribution could be Internet based by the year 2004...$10 billion to $15 billion worth." -- Steve Harmon, e-harmon.com CEO As one of the most widely-read Internet analysts on the Web, Steve Harmon looks at the sector with a different twist than other analysts. In today's Q&A, Steve digs into his e-mail bag to take your questions on the digital music distribution industry, Sun Microsystem's acquisition of Star Division, and the outlook for 1-800-Flowers.com. Check out this Money Talk exclusive! Money Talk: I would like to know what you think about the long and short on Egghead.com. Harmon: As far as an attractive business to be in, I don't think Egghead.com {EGGS} on its face has a great model. E-tail is fierce and margins are thin. However, EGGS has about $100 million in cash, meaning if it's trading at $240 million market cap, like it was the other day, that any acquirer could take Egghead out and mitigate its risk with a cash horde that makes the effective deal value less in terms of out of pocket. A Beyond.com {BYND} could buy EGGS for the cash since the market cap is so low it's an effective way to raise free money for the right acquirer. Or Digital River {DRIV} is a good fit in my opinion. Money Talk: Can you share some thoughts on Sun Microsystem's acquisition of Star Division and their strategy to offer Star Division's word processor and spreadsheet software for free over the Internet? And how badly will that hurt Corel Corp? Harmon: Sun {SUNW} takes aim at changing the fundamental business model of selling software. Microsoft {MSFT} bundles applications like a McDonald's Happy Meal and Supersizes the fries every chance it gets. More and more software is stuck together. If, however, software becomes rented as a service, then applications are not as important. Bloatware goes away. Use what you need and nothing more. If software is totally a la carte and rented, then it establishes Sun as a leader at least in the attempt to change the model at the application level. It's not about word processors it's about changing the fundamental model. Money Talk: What's your take on the current state of the market in digital music distribution? Where do you see the EMusic.com's and MP3.com's of the world heading? Harmon: I think MP3.com {MPPP} may have a real chance at being the epicenter of digital music. It has one of the most critical elements: users. eMusic.com {EMUS} has a great brand but I believe it has further to go in developing its user friendliness. In 1994, I wrote a 10-year forecast for digitally delivered music via the Internet and I continue to hold the view that as much as 10% to 15% of all music distribution could be Internet based by the year 2004...$10 billion to $15 billion worth. That's if music selling models don't change. I can see how they may, where a pure sales model like today adapts to new ways of experiencing music as a buyer. Money Talk: Why are you now talking about valuations (you like AmeriTrade better than ETrade based on valuation - Money Talk Q&A - 8/27) when it comes to Internet stocks? Based on your previous comments, you look at different valuation models such as growth and name brand. Do you still think AMTD is better than EGRP, and either way, what is your recommendation on both of these? Harmon: The heart of what I do and always have done is based on valuations using traditional and the Internet metrics that I invented and now Wall Street also uses. It's not just one valuation tool such as peer or peer market caps. Each tool has its place and gets more play on my toolbench depending on the project. With regards to Ameritrade {AMTD} and ETRADE {EGRP}, I tend to think a sector play makes more sense than a one-horse play. For example, if you had bought the entire basket of search engines in 1996, you would have done well as they all gained tremendous value over time. That's not to say that the online brokers will do similar; it's more of a sector allocation to reduce risk and discount the notion that more than one horse can win the race. Like the Olympics, it's not just the gold medalist who walks away with the medal or metal. Silver and bronze are glad they showed up also. Money Talk: CNET is 50% off its 52-week high. What short and long term prospect do you see for the company? Harmon: I think CNET beat Ziff Davis {ZD} and all the other Internet and tech news Websites at the tech news and resource game. It has plenty of cash and a small portfolio of Internet investments that are mildly interesting. NBC owns 4.9%. Money Talk: Do you know if Navarre's spinoff of NetRadio will ever happen? Any thoughts on the prospects for investors? Harmon: It may free up some shareholder value for Navarre in the way that Net2Phone {NTOP} did for IDT Corp. {IDTC}. Not as big of a spinoff but the notion is the same: unlock value. Money Talk: What do you think about Goldman Sachs's IPO 1-800-Flowers.com's long-term, and short-term now that it's coming out of the quiet period? Harmon: 1-800-Flowers.com {FLWS} is the category leader in flower sales via the Internet having been online for several years now. It's trying to branch out into other gift deliveries which may or may not pan out. The problem is two-fold: 1 ) the company name is a throwback to toll-free dialing and 2) the name is not agnostic; it's tied to flowers. CDNow {CDNW} has a similar problem. Amazon.com {AMZN} can sell anything. It's brand neutral. If you have a question for Steve or a comment about today's Money Talk Q&A, you can e-mail him at harmon@cnbc.com. The next edition of "Steve Harmon's E-Mail Bag" will be published on Tuesday, September 7th.. Back to the CNBC.com Money Talk Page

To: Fred Fahmy who wrote (87754)	9/4/1999 6:59:00 PM
From: Process Boy	Read Replies (2) \| Respond to of 186894

Fred - <The market share the AMD fans always love to talk about are expressed in terms of units.....this is by far the most meaningless expression of market share. Actually, it's almost completely meaningless. Anyone can increase volume share if they are willing to sell at a loss. This might make for some exciting headlines, but it is hardly a winning business strategy> Nice post!!! The only thing I might add is that if your strategy is just to "hurt" a competitor regardless of your own well being, I guess the strategy may (or may not) be applicable. I've been wondering where you were, ever since INTC topped 80, since I know we've had discussion about that number before. Later Fred, PB