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Non-Tech : Knight/Trimark Group, Inc. -- Ignore unavailable to you. Want to Upgrade?

To: the dodger who wrote (5155)	10/17/1999 10:48:00 AM
From: Gary Korn	Read Replies (1) \| Respond to of 10027

well, in terms of pennies, he ended up missing the bottom line by about 1.7 billion pennies when NITE came in at .19 for the Q. So the question to me is, if KP can't see down the pipe any better than that, why should I trust his estimates on long-term growth? Touche' Should we expect next year to be 30% better than this year...or did we draw a "line in the sand" and start with this quarter? That's how I took it. Blankmind as well. I must be wrong, and will rething all those random thoughts. So they're not an internet play, not a momentum play, certainly not a growth play -- (they're shrinking) I take issue with this comment vis-a-vis NITE not being a growth play: 1. KP's guidance (for what it's worth) of 30% growth suggests a growth play to me. That's a faster growth rate than a number of growth companies in growth sectors. Faster, for example, than ASND, which ran from 20 to 60 before it was bought. 2. NITE soon will be entering the options market. No one seems to know how much revenue that will mean, and how much additional earnings will drop to the bottom line. I've been told, though, that options trading can show higher margins than equities trading (for example, 50% of options won't be traded for free, with no spread, as is the case with equities). In any event, this potential is the same kind of potential as any kind of high tech growth company shows. 3. Euro OLBs. NITE is one of the few players actually creating this market, along with its old Roundtable partners. The revenues will be smaller than options revenues, but we are looking at a second brand new revenue stream all the same. Isn't the creation of a brand new market/product almost the very definition of a growth company? I think "free cash-flow" is a much more relevant valuation yardstick the its PE ratio..currently NITE trades at about 35X FCF...which is approximately double the rest of it's sector. Yes, it has better growth than its brethren in the sector, but NITE's market share seems to have peaked back in Spring at around 19%...it has been giving up about 1% of that each month since May (it is however, showing good signs of "basing" here in OCT...now in the 14-15% range.) 1. I'm not sure who you are comparing to for your FCF comparison. GS trades at a trailing p.e. of 17, which is almost where NITE is now. AXP trades at a trailing p.e. of 27, well above where NITE trades (it is equivalent to NITE at 32). MER trades at a trailing p.e. of 13, which would bring NITE down another 6 points at most. So, just to help me out here, can you please give a list of your FCF comparisons, and the numbers used. 2. Beyond that, my comment above also applies. First, even if U.S. equity online trading has ceased growing and NITE's market share has halted, there are two (2) entirely new markets ahead of us in the not to distant future: options and European online trading. 3. In addition, apart from the significant NEW markets before NITE, I believe it is a faulty assumption to conclude that the existing market, U.S. equity online trading, has ceased growing. The Forrester report anticipates huge growth going forward. The U.S. OLBs are spending vast advertising dollars towards this end. The Merrill's of the world are going online, bringing still more customers with them (there was a comment in the cc about a quadrupling of online activity from one brokerage that moved from traditional to online investing). In short, the numbers will increase over time, at a rate no one now knows. 4. Beyond increased numbers, there is the potential for a seizure of greater market share with such events as decimalization. KP clearly is anticipating this move, which will shrink margins and drive marginal MMs out of the business (to NITE's benefit)(it apparently may also spell the death knell for a significant NITE cost, payment for order flow). Anyway, MER and GS among others used to make a market in several thousand securities. Not any more, the money wasn't there for them. It is for NITE, the McDonalds of MMs. Gary Korn

To: the dodger who wrote (5155)	10/17/1999 11:25:00 AM
From: Gary Korn	Respond to of 10027

NITE's market share seems to have peaked back in Spring at around 19%...it has been giving up about 1% of that each month since May (it is however, showing good signs of "basing" here in OCT...now in the 14-15% range.) The point is, they have a shrinking piece of a very volatile pie...the market rarely puts a premium on such situations Dodger, I guess I take issue with this comment as well. There really is no indication that NITE's market share has declined in the 5,500 odd small cap stocks where it makes it bread and butter. Rather than a market share decline, it does clearly appear that trading in these stocks simply has dried up (the small cap ralley is over). Instead, big cap issues are the more active stocks. (Where ECNs and all other players are active). When the small caps become more active again, the market share percentages will change. Gary Korn

To: the dodger who wrote (5155)	10/17/1999 6:39:00 PM
From: Sir Francis Drake	Read Replies (3) \| Respond to of 10027

<<NITE has a BIG problem I haven't seen discussed on the thread yet...namely rotation in ownership>> On the contrary, I've discussed this issue for months - most recently, just a few days ago: <<The technical damage at this point is so immense, that it will need practically a wholesale change of shareholder ownership - because as it climbs, many people will be selling at their various break-even points. There will be a reservoir of permanently traumatized former holders. This is not great news, because those were the people who were aware of NITE's existence. Now it'll have to recruit a whole new shareholder group - slow process. Meanwhile, there are still quite a few shares overhanging, that need to be cleared.>> Message 11535553 Also, long before Jim Preisler, I discussed how tragic it is for NITE to be now perceived as strictly a finance/brokerage company/stock, because unlike many internets etc., you will now get a p/e assigned to you of anywhere between 18-28. One other aspect which I touched on some months ago, is now becoming unfortunately true: abandonment by many "true believers". Incredible as it may seem, there were still many "old-time" holders who bought from $60 and above, who held on through until earnings. These were the people who held NITE more on FA grounds rather than pure momentum/inet players. They were the one's who kept thinking that the reasons for NITE's decline were purely external (bad markets, too many shares sold by OLBs, 'bad shorters' etc.), and therefore were loyal to NITE on fundamental grounds. When I said that "there must be something out there" to account for such a bloodletting, and cannot be accounted for by mere technical trading reasons, those were the one's who rejeced that hypothesis. The earnings were certainly a deep shock to them, and a serious cause for re-assesment. A certain percentage of them decided that not only is the stock technically broken, which was obvious, but that NITE's "story" was broken, and that now it is questionable on FA grounds as well. This is evidenced by the fact that NITE never recovered from the earnings announcement or the subsequent cc. Usually, when the "bad news" which was the cause for the decline is revealed, the stock takes a brief dip, and then rallies up, as people say "so that's what it was, OK, but the story is intact", and now the stock is free to recover. Instead, NITE has had an unbroken decline. Personally, I've talked to many former NITE-bulls, and received PMs from those that used to be true believers, who are now very disenchanted. This is obviously anecdotal evidence, so I have no idea what the percentage of NITE perma-bulls has thrown in the towel. All I know, is that a certain % of the true believers, believers on FA grounds, has bailed, and others are going to bail as soon as NITE recovers some (typical response "it would be stupid to sell now, because we are close to the bottom, but as soon as it moves up, I'm selling"). This is troubling for NITE, because if even the true believers are gone, the job of recruiting a new shareholder class is much more difficult. What this shapes up as, is a very long road up. It took 6 months for NITE to break down. It has broken down as badly as a stock can. It will take much longer to travel back up. Much, much longer. JIMO. Morgan