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Strategies & Market Trends : Market Gems:Stocks w/Strong Earnings and High Tech. Rank -- Ignore unavailable to you. Want to Upgrade?

To: bobby is sleepless in seattle who wrote (74263)	12/4/1999 5:06:00 PM
From: kendall harmon	Read Replies (1) \| Respond to of 120523

One day wonder phenomenon, from today's ny times: <<CALL it the one-day wonder. It is the latest manifestation of Wall Street's speculative fever, one that moves at turbocharged speed with ample help from the Internet and cable television. A one-day wonder is a long-dormant stock that leaps from a low price to a very high one in the course of a single day, or at most two. There is talk that a new product is a killer that will soon dominate a hot industry. The trading volume can be huge, perhaps several times the number of shares in existence. Internet chat rooms and cable television shows focus on the stock. Analysts are found to explain its attraction. The chief executive may turn up to discuss his high hopes for his new product. Then, just as suddenly, the price collapses. In a day, most of the gains are lost. Over a period of a few days or a few weeks, the price returns to its previous low level. The speed is what distinguishes such moves most from those of past speculative markets. In those days, it could take weeks for an obscure stock to get attention and build enthusiasm. Few people could monitor minute-by-minute trading and there were limits to how many people could be reached in a day by promoters pushing a stock. Now speculators can see moves instantly and then leap in quickly while paying commissions far below those of years past. Consider the case of V-ONE. It is a stock that has been around since going public at $5 a share in 1996. Its sales peaked in 1997, and it has consistently lost money. Its auditor -- since fired -- warned early this year that it might not be able to continue as a going concern. Nasdaq threatened to delist it unless it raised more capital. For months it traded around $3 a share, although a product announcement briefly pushed it over $5 in early September. It was just after that run that the company came up with the capital needed to stay on Nasdaq. It raised $8 million in a private offering of preferred stock with warrants. For every $26.25 in preferred that a buyer took, he or she got 10 warrants to buy V-ONE common at $2.625 a share. The price surge came last week. V-ONE announced that it was ready to ship an Internet-security product that is compatible with Red Hat's version of the Linux computer operating system. (Red Hat is a wonder, but not of the one-day variety. It went public at $14 a share in August, topped $50 the first day of trading and now is at $210.) V-ONE shares leaped from under $4 to a high of $15.50 on Tuesday, closing at $13.50. At 60 million shares, volume was triple the number of shares outstanding. By yesterday, the price was down to $7.84. It's a good bet that some of the investors in the September deal sold on Tuesday. Perhaps V-ONE's fortunes will finally turn, and its latest product will provide the success that has heretofore eluded it. In Internet chat rooms discussing the stock, however, that was not the principal issue being debated. There was talk that the stock had to rise because all the available shares had been bought. Close attention was paid to coverage of the stock on CNBC and CNNfn. Insults were exchanged between speculators who were buying the stock and those who were selling it short. The most illuminating comment came from a trader who wrote that V-ONE could be another Ariel Corporation. Ariel was then trading around $12 a share, a few days after jumping from $4 to $57 on the strength of an announcement of plans to offer an Internet-related product. The writer was not, however, being critical. He believed he could get in on V-ONE's rise and get out before the fall.>> nytimes.com