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Technology Stocks : Oracle Corporation (ORCL) -- Ignore unavailable to you. Want to Upgrade?

To: Bipin Prasad who wrote (11992)	9/18/1999 2:19:00 AM
From: Paul van Wijk	Read Replies (2) \| Respond to of 19079

Top 10 B2B, how to get rich from the GS-article. As far as I can remember I have never seen a company like Goldman & Sachs predicting a new market from the size of 1.500.000.000.000,- dollars. And because they tipped Oracle and Sap as the big winners these guys seems to understand this market. Oracle is still my favorite, not only because SAP is a german company. (I'm not referring to the war, I'm refering to the Soccer World Cup-final in 1974 which we lost we 2-1 and is still costing me a good sleep every once in a while.) Anyhow, now that we know their we be another "hurricane" (with all respect for the damage the real one is doing, I'm not kidding about it) I decided to base my portofolio from now on, on that coming market. I'm also an investor, not a trader. I like and look for fundamentals. I came up with the following list, and would appreciate some feedback. I don't like the start-ups and one-product companies. Horizon is too impredictable. A good product is one thing, execution (and making profit) is another thing. So I prefer the stocks with less downside risk. To keep it simple, Amazon did great last few years and the more succes they have, the more cash they are burning. This will also happen to the "winners" in the B2B-market. So, no Ariba, no Commerce One etc. Well, here's my personal top 10 1. Oracle, monopoly in the (growing) database-market, available in all the important software-areas like CRM, ERP, SCM, etc. And of course LE. 2. US Web!! Nr.1 in strategic consultancy. 3. SAP (sleeping Giant that invested big in e-business in the last 3 years. Lots of ERP-knowledge, worldwide customer base. And the Goldman Sachs-analysis) 4. Compaq, server-farms to run the huge, big and mission- critical databases in the future. (Remember Tandem & Digital). 5. Cisco 6. IBM 7. Sun (although I never have a clear of what these guys are doing, too much products, too little mainstream) 8. Dell, a bit tricky, Dell's succes the last decade was based on direct selling of hardware (first PC's, then servers, then workstations etc.) Now they are diversifying (Free Internet Service Provider, the new E-Bay with MSFT etc. Diversifying is a risky strategy with very little chance of succes (about 10%). On the plus, Michael Dell has brains. 9. EMC 10. ???? So, 1. Oracle 2. Us WEB 3. SAP 4. Compaq 5. Cisco 6. IBM 7. Sun 8. Dell 9. EMC 10. ??? 341. Microsoft So far I own the top-3. The rest I will buy "on the dip". Compaq has a strong bottom at low 20, so less risk to the downside. Any comments, consider it a beta-version of the B2B-porto. Paul

To: Bipin Prasad who wrote (11992)	9/18/1999 2:23:00 AM
From: Paul van Wijk	Respond to of 19079

Why I don't like the start-ups in B2B, well explained by a street.com guy. A must-read (and must be taken serious) for anyone who wants to INVEST (NOT TRADE) the 1.5 billion dollar B2B-markt. Move Over Y2K, B2B Is Here By Adam Lashinsky Silicon Valley Columnist 9/17/99 7:00 AM ET Business-to-business e-commerce now officially is the Next Big Thing. Why? Because Goldman Sachs says so in a report it issued Thursday. 'Nuff said. Pay attention, though, to the details beneath the hype. They suggest it also is going to be the Next Big Disruption for tech-stock investors who get caught crosswise of the euphoria. B2B, as the smart set calls it (yes, you're going to hear this every bit as much as Y2K), indeed is going to be big. Goldman's analysts estimate overall B2B industry revenue of $1.5 trillion by 2004. This means that revenue associated with commerce conducted over the Internet between and among businesses, as opposed to consumers, will grow more than 10-fold from an estimated $115 billion this year. A few potential B2B problems bubbled to the surface, however, for those who listened carefully to Goldman's conference call with institutional investors immediately before its teleconference with reporters. See, Goldman wants to hype B2B e-commerce because right now there are precious few publicly traded B2B stocks, a short list that includes Ariba (ARBA:Nasdaq), VerticalNet (VERT:Nasdaq), Commerce One (CMRC:Nasdaq), IntraWare (ITRA:Nasdaq), Internet Capital Group (ICGE:Nasdaq), pcOrder.com (PCOR:Nasdaq), Chemdex (CMDX:Nasdaq) and Healtheon (HLTH:Nasdaq). The combined revenue over the last year of those fledgling companies is just over $200 million, about 3 1/2 days worth of sales for Dell Computer (DELL:Nasdaq). If industry sales really are to explode within five years, there'll be tons of upstarts for Goldman to take public (see below). The catch is that Goldman's hot-shot Internet analyst Rakesh Sood and veteran software guru Richard Sherlund dutifully point out the risks with B2B. For credibility, they must. Presumably, they're also beginning to establish the difference between a Goldman client and everyone else. For one thing, it's a given that scores of inferior B2B companies will try to sneak through the IPO process along with the good ones. Business-to-consumer offerings started as a trickle before the floodgates opened this year. B2B stocks will skip quickly to the overkill stage. "We have to beware of the hype," says Sood. The six-analyst Goldman report is more specific: "Regarding stock recommendations -- we believe that there will be a number of beneficiaries, but fewer long-term winners." Remember that when scrutinizing a specific IPO candidate being brought public by Goldman or one of its competitors. Sood also touches indirectly on one of the fundamental problems of B2B: Automating slim-margined businesses creates automated slim-margined businesses -- not instant technology companies. He speaks of B2B companies having a "revenue blend." Translation: Many B2B companies won't be particularly profitable on most of what they do, even if they are extraordinarily profitable in some part of the business. Sherlund is more specific. He notes, with envy, that the best of the companies Sood follows typically trade at 20 or 30 times their revenue. In contrast, Sherlund's top picks fetch a meager 50 to 60 times earnings. As established enterprise software companies like Oracle (ORCL:Nasdaq) and SAP (SAP:NYSE) gun for Internet-type valuations, they'll have to tear up their business models and start from scratch. And that, says Sherlund, will make for a difficult transition for many. He predicts more older companies will consider issuing tracking stocks for their B2B efforts and that the clashes between entrenched players and the "dozens" of startups will be tumultuous. Another usually unspoken truth about the new crop of B2B stars is that they're actually software companies masquerading as Internet concerns. Unless a company has predictable, recurring revenue streams, like B2B standouts Yahoo! (YHOO:Nasdaq) or America Online (AOL:NYSE), it's just another enterprise software company, albeit in a new niche. This is relevant because software makers that make big-ticket sales to a handful of customers are famously susceptible to end-of-quarter deals that yield the dreaded hockey-stick sales curve. Back-end loaded quarters make for poor visibility, which makes for volatility in the stock. Says Sherlund: "You don't want to pay 20 to 30 times revenue if you're unsure if they're going to make the quarter."