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Technology Stocks : InfoSpace (INSP): Where GNET went! -- Ignore unavailable to you. Want to Upgrade?

To: Larry Zenith who wrote (13132)	10/21/1999 10:38:00 PM
From: jim	Read Replies (1) \| Respond to of 28311

Here's the full or should I say full of it text; This operator of financial and games Web sites is selling for $54 per share, or a total market cap of nearly $1.5 billion. But that is more than 100 times its revenues — and an infinite multiple on earnings, which are non-existent. Though the company does have positive cash flow from its operations, why that flow should be any more valuable than cash from, say America Online, is a mystery. AOL, for example, is currently selling for around 100 times cash flow, suggesting that GNET, which will likely end up with somewhere around $4 million of FY1999 cash flow, ought to be selling for $400 million, or somewhere around $15 per share. That works out to not much more than the stock's current book value of $12 per share — book value that would itself be non-existent except for the fact that Paul Allen's Vulcan Ventures pumped $450 million in convertible preferred stock into the company at a spectacular 50 percent discount from the market price for the common — suggesting that even the company didn't think its stock was worth more than $33 per share.

To: Larry Zenith who wrote (13132)	10/22/1999 11:55:00 AM
From: Lizzie Tudor	Respond to of 28311

Beyond the gnet specifics, there are a few clueless comments in this piece, imo. Levitt said a web of ?dysfunctional relationships? has begun to develop on Wall Street, ? where analysts learn to rely on ?guidance? from the companies themselves in developing price/earnings forecasts, where reported earnings are tailored to the analysts? estimates instead of reality, where companies work to lower expectations when they fully expect they?ll beat the estimates ? and analysts are told not to let their view of a company?s prospects upset their employer?s investment banking relationships. First of all, imo, these "dysunctional relationships" have been around forever, and they used to be much, much worse (when the big houses really dominated WS, 10 years ago, etc.). I remember the analysts used to call the firms and were given guidance on the qtr a day or so before it was reported. There used to be this saying - "there is no inside info on WS, its all inside info" - which pretty much summed it up... the opening up of the mkts to individuals has really improved things, imo. The next thing that needs to be fixed is venture capital, which is another old boy's network, and that is improving also with the advent of wit and e-offering. One of the reasons the companies themselves lower expectations these days, which has an effect of making analyst targets fairly useless, is because of the excessive class action lawsuits that kept popping up. Now everybody tries to tone things down and put all the positive stuff in the call, which is more subjective. I know the street.com hired a bunch of personal finance writers from the SF chronicle and now they are functioning as sort of pseudo-analysts on tscm, I wonder if this guy is the same deal.