Morning all: JCDA in nice article from MarketWatch:
Fidelity Investments presents:
Thom Calandra's StockWatch
Keeping up with the (Dow) Joneses
Plus: Mazel tov! Shares Radware, Jacada of Israel surge
By Thom Calandra, CBS MarketWatch
Last Update: 4:38 PM ET Oct 27, 1999 More StockWatch
Commentary New!
SAN FRANCISCO (CBS.MW) -- Technology's place in stock markets around the world is gaining in stature.
Today on CBS MarketWatch
The London Stock Exchange is trumpeting a new grouping of technology companies. Europe has a flock of "new-age" companies in Easdaq and the Neuer Markt in Germany. Japan's best stock performers include Yahoo Japan and Internet capital venture firm Softbank.
Indeed, the 'Net's buzz regularly boosts shares in Japan, Hong Kong, even staid equity outposts in Sweden and Denmark. Overnight, the mere mention of a new Internet banking business and partnership with Seven-Eleven Japan for Ito-Yokado Co. (IYCOY: news, msgs), a supermarket operator, sent the company's shares up more than 10 percent. See our ADR Report.
Internet Initiatives Japan (IIJI: news, msgs), an Internet service provider, has seen its shares rise to 64 from an opening trade of 23 3/4 when the Japanese company listed its shares as American Depositary Receipts on Nasdaq in August. And so on.
Oh, and then there is that Dow Jones, publisher of the Wall Street Journal Interactive service on the Internet. (Oh, and a few newspapers, too.) Conservative Dow Jones & Co.'s (DJ: news, msgs) move to increase the tech weighting of its 103-year-old Dow Jones Industrial Average ($INDU: news, msgs) puts it in the same company as the McGraw-Hill Cos. (MHP: news, msgs), owner of the Standard & Poor's indexes. In fact, the Standard & Poor's 500 Index ($SPX: news, msgs), the real McCoy when it comes to benchmark stock indexes that U.S. fund managers use as performance guides, has a higher technology weighting than the new Dow.
By adding Microsoft and Intel Corp., Dow Jones has given the world's best known stock index a computer technology weighting of about 19 1/2 percent. The weighting includes Hewlett-Packard, which was added to the index in 1997, and Eastman Kodak, which has been trying to become a technology company since the mid-1980s, when I wrote about the company as a newspaper reporter in Rochester, N.Y.
(Plus, the Dow might be more of a technology index than some folks think. Companies such as drug maker Merck & Co. and entertainment giant and Internet wanna-be Walt Disney Cos. (DIS: news, msgs) aren't considered in that 19 percent tech weighting. Maybe they should be.)
The Standard & Poor's 500 Index, in contrast, has a computer technology weighting of about 25 percent, thanks in part to Standard & Poor's Corp.'s recent addition of America Online.
Some investors -- like former stockbroker Neil McDermott -- think Dow Jones's effort to keep up with the McGraw-Hills of the world might inject more air into what some folks call a stock-market bubble.
"I have seen them reshuffle the Dow before but my God, they must be desperate this time to keep this bubble alive," McDermott told me.
Perhaps. But if I were an investor who just had to own all 30 Dow stocks (there is only about $175 million of money that tracks the industrial average among U.S. mutual funds), I think I'd rather own an Intel or a Home Depot than a Sears Roebuck & Co. (S: news, msgs).
Too bad for Sears. The department store's selection of appliances on the Web is probably the largest on the Internet. Hey, there's no rule that says a company can't get re-included in the Dow, is there?
Israel rocks: The last time we visited with freshly scrubbed Israeli company Radware Ltd., it was at Internet World in New York. The mere mention of the company's new product -- and a fund manager's enthusiasm for the post-IPO shares (RDWR: news, msgs) -- sent the Internet company's shares to 46 from 26. See the original StockWatch.
On Wednesday, after this column was published, the stock soared again. So did several other neglected Israel stocks.
Radware's LinkProof manages traffic among multiple Internet router connections. Wall Street, after watching the early October initial public offering languish, now likes what it sees. Salomon Smith Barney this week launched coverage of Radware with a "buy" rating and a $60 price target. The business of routing Internet traffic will grow to $1 billion in the next two years from about $130 million in 1998, the investment bank said in a report.
Shares of Radware and Foundry
Another boost for the Israeli company could come next week in Atlanta. That's when a bunch of Israeli companies will show off their Internet technology. See the line-up of companies.
Radware claims its routing products offer companies' the first load-balancing solution for networks with multiple Internet connections. Israeli technology companies are -- well, hot as all heck these days. See our London take on Israel.
One investor tells me that Radware likely will follow in the footsteps of other Internet infrastructure companies when it posts its quarterly report in the middle of next week. After all, F5 Networks (FFIV: news, msgs) this week smashed through its Wall Street earnings estimates. The company earned 11 cents a share ($2.3 million) in its quarter -- in the face of most analysts who were expecting a loss.
Shares of F5 rose more than 40 percent Wednesday afternoon, giving the Seattle company a market worth of more than $2.5 billion. In contrast, Radware's shares are worth about $650 million.
Another Internet traffic manager, Extreme Networks (EXTR: news, msgs), also is profitable and beat earnings estimates last week. Many of these companies, which include $8.8 billion Foundry Networks (FDRY: news, msgs), claim in their product brochures that their routers and other networking equipment are easier to install and maintain that those of industry leader Cisco Systems (CSCO: news, msgs).
Tel Aviv-based Radware shares rose 14 1/8 to 54 7/8 Wednesday afternoon on Nasdaq. Outside of Israel, shares of California-based Extreme Networks rose as much as 4 1/8 to 80. Only Alteon WebSystems (ATON: news, msgs), a California company that just posted a net quarterly loss amid record-high sales, saw its shares slip Wednesday.
Israeli tech stocks are getting more respect from investors this month on Nasdaq, where dozens of them are listed. One little-known Israeli Internet company, Jacada Ltd. (JCDA: news, msgs), saw its neglected shares rise sharply Wednesday. The software company, whose shares were sold to the public for the first time two weeks ago, uses the Java programming language to deliver software applications via the World Wide Web. The company's shares came public on Nasdaq on a rocky day, then almost immediately dropped below their offering price of $11 on Oct. 15. On Wednesday afternoon, after this column was published, Jacada shares rose 4 3/16 to 13 3/8. |
