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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Jay Rommel who wrote (84709)	11/20/1999 2:57:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

NetTrends: From the e-clutter, a few winners By Dick Satran SAN FRANCISCO, Nov 17 (Reuters) - The clutter of television commercials tells the story of Christmas for online retailers. There's not enough room at the inn for all of them. TV is saturated with "dotcom" ads, paid for by the billions of dollars poured into e-commerce startups by venture capitalists and stock market investors, and it's getting increasingly difficult for startups to get noticed. The fear of a blue Christmas is driving investors all the more quickly to a new wave of Internet companies that deal almost entirely with businesses, and not with consumers. While the stocks of retailers like Amazon.com Inc. <AMZN.O> have fallen, business services like Ariba Inc. <ARBA.O> have soared. But at a conference this week called NetMarketMakers, in Berkley, Calif., optimism over the business-to-business boom was laced with worries that history would repeat itself, with too many companies chasing too few sales. "It could become a bubble if it gets ahead of itself," said Mohanbir Sawhney, a consultant and professor of electronic commerce at Northwestern University. "If it got out of sync, the whole thing could come crashing down. Which is scary." The boom in stock market initial offerings has been fed by massive demand that's extremely fickle, and that creates a pervasive fear in the industry. The record wave of IPOs has been centered on a narrow sector of the Internet. "Each new wave is layered upon the other," said Mary Meeker, the Morgan Stanley Dean Witter Internet guru. Instead of the much-predicted "bubble," there's been a rotation that's seen bull markets in search companies, then consumer sites, and now business sites. "We've had three bull markets and three bear markets this year alone," said Meeker. The long-term trend is upward for Internet-related stocks, she said, especially on the business side, but not without lots of volatility. The roughest ride will be for the consumer sites in the months ahead, as they go through a Christmas loaded with expectations that can't possibly be fulfilled, analysts said. "I really worry about Christmas," said Volpe Brown Whelan analyst Charlie Finnie. "A lot of consumer sites are going to have to pay the piper. Many of them won't reach their targets and there will be a fairly hard shakeout, with the losers spiraling down and a lot of air coming out." The losers "will either be out of business or be merged" with stronger sites, Finnie said. Meeker agreed that a shakeout would take place. "Definitely," she said, "but the critical period won't be Christmas but the March quarter," when the ad budgets dip, consumers stop buying and cash runs low. The idea that consumers sites are in a death struggle is nothing new. It's been highlighted at each earnings period when market leaders like Amazon.com Inc. and E*Group Inc. <EGRP.O> have said they will boost advertising to build market share, and forget about any immediate profit. Business sites have managed to gain favor with investors partly because they can avoid the huge ad layouts that retail sites need to build brand recognition. However, just like the consumer sites, the so-called "B-to-B" companies will face the challenge of many new cash-rich players entering their market. Scores of new companies are getting funded and going public. Still, it's generally conceded that only a handful of survivors will be left in each market segment. "The market share leader tends to get more market," said Volpe Brown's Finnie. "There's no need for a No. 2." The same pressure that exists to dominate on the retail side will exist for commerce sites, most agreed at the NetMarkets conference. There might be room "for a No. 2, like Avis," in each of the B-to-B markets, said Mark Walsh of VerticalNet Inc., whose company sets up portals for industry groups. But the number will be limited. "There used to be 50 car companies...