Barbara, Here it is. Interesting to note that most stocks took off after it was published. Not a bad basket of stock for the long types. Jack
From theStreet: 10 Things You Need to Know: Wireless Internet
Stocks -- Understanding
the Monster
By Cory Johnson
Editor-at-Large
1/3/00 10:38 AM ET
This story is part of a weeklong
series that looks at the top 10
trends to help you invest in the
coming year. Click on the tile at
left to see other stories.
"For what we are about to see
next, we must enter quietly into the realm ... of genius!"
-- Gene Wilder, as Dr. Frederick "Fronckensteen"
Frankenstein, Young Frankenstein (1974)
Forget Net IPOs and B2Bs. The Next Big Thing in the
eyes of Wall Street is wireless Internet. With shares of
wireless Internet pure plays like Phone.com
(PHCM:Nasdaq - news) and Puma (PUMA:Nasdaq -
news) surging, investors have already turned their sights
toward this collision of the two fastest-growing global
technologies. And with the Consumer Electronics
Show looming in Las Vegas this week, the monster of
wireless Internet is sure to incite the mobs as well.
Wireless Internet is the ability to log on to the Net from
anywhere, using any number of devices, from cell
phones to Palm VIIs to, who knows, Dick Tracy-style
watches.
Three years from now there
will be twice as many
wireless Internet users as
there were Internet users at
the beginning of 1999, says analyst Mark McKechnie of
Banc of America Securities. And after years of
dreaming about wireless networking, the recent adoption
of Phone.com's HTML-like WAP -- Wireless Application
Protocol -- standard (which lets devices access email
and Web pages) allows wireless Internet to come alive.
But there is fear on the Street.
Investors are just starting to understand the Internet
stock market, so how to make sensible investment
strategies surrounding wireless? How to differentiate
between the investments that favor wireless standards
TDMA over CDMA over CDPD? How can investors make
sure their heads are screwed on straight?
How else, but through the metaphor of the greatest
movie of the now-past 20th century, Mel Brooks'
classic, Young Frankenstein. (What, that didn't make
your list?)
See, the stocks in the mobile Internet market can be
divided quite easily into the five parts of Herr Doctor's
great creation. (Note to reader: Best if you imagine
crackling lightning and loud organ music at each
subhead.)
The Monster's Body -- the Handset Makers
The most obvious incarnation of this new creation is the
wireless phone itself. The dozens of funky designs set
to be unveiled at the Consumer Electronics Show this
week promise that the phones of 2000 may make us
forget all about the harmonica-shaped cell phones of
today.
Nokia (NOK:NYSE ADR - news) dominates this group,
with Ericsson (ERICY:Nasdaq ADR - news) and
Motorola (MOT:NYSE - news) desperately trying to
resuscitate their businesses. Newcomers like 3Com's
(COMS:Nasdaq - news) Palm (about to do an IPO) and
Research In Motion (RIMM:Nasdaq - news) -- with its
popular Inter@active RIM pager -- are aspiring monsters.
The Monster's Guts -- Chips and Components
As these phones evolve from handling the relatively
simple task of translating voice to data, the pieces
inside get more complex. Intel's recent purchase of DSP
Communications (DSPG:Nasdaq - news) shows that
even the best and brightest semiconductor
manufacturers require unique wireless competencies.
And it's not just chips. RF Micro Devices
(RFMD:Nasdaq - news) has seen its shares double in
the last six months in hopes that the mobile
marketplace will spring to life. Similarly, Sawtek's
(SAWS:Nasdaq - news) audio filters and TriQuint's
(TQNT:Nasdaq - news) gallium arsenide circuitry and
semiconductors let manufacturers cram more power into
smaller phones.
The Monster's Brain -- WAP
Banc of America's McKechnie likes to call Phone.com
the "Netscape of the wireless Internet -- with a much
better business plan." Phone.com, formerly Unwired
Planet, pulled together the disjointed efforts of
Ericcson, Motorola and Nokia. They agreed on WAP,
owned by Phone.com, to establish a global standard for
the display of Internet content over small-screen devices
-- no easy feat. (Or to quote Dr. Frederick Frankenstein:
"Hearts and kidneys are tinkertoys! I'm talking about the
central nervous system!")
The WAP Forum now includes more than 200 computer,
component, semiconductor and software makers. In
exchange for giving away its microbrowser and server,
McKechnie says, Phone.com will get paid somewhere
between $10 to $15 for each new subscriber that
carriers sign up.
Dr. Frankenstein's Laboratory -- the Software
Software does all the pushing and pulling that will bring
the beast alive. A handful of companies is trying to build
special applications, repurpose Web content or simply
interface with existing data for wireless devices.
Surely the most prominent of these companies is San
Jose, Calif.-based Puma, which went public in
December 1996. Puma provides the connection between
corporate databases and far-flung devices. The stock,
which traded as low as 4 1/4 in August, is now above
130.
But the handheld software field is still wide open. Other
software and application makers of note include Aether
(AETH:Nasdaq - news), Interleaf (LEAF:Nasdaq -
news), SmartServ (SSOL:Nasdaq - news) and
Geoworks (GWRX:Nasdaq - news). Geoworks, a
wireless stock seemingly as old as Dr. Frankenstein's
castle, is suddenly back to life, trading at around 16
after a year and a half below 5.
Lightning! -- the Network
The crucial cracking power of the market has ignited
makers of wireless networking equipment, and none
more so than Qualcomm (QCOM:Nasdaq - news).
Qualcomm was the best-performing stock in the S&P
500 in 1999, surging 2600%. But the old dogs in
networking like Cisco (CSCO:Nasdaq - news) and 3Com
are dueling alongside Qualcomm in the wireless arena,
as are newcomers like P-Com (PCMS:Nasdaq - news),
which makes access equipment that helps carriers
speed the installation of high-speed wireless broadband
connections.
The combination of all these parts has created a
frighteningly large beast that appears unstoppable. The
Strategis Group of Washington, D.C., estimates that
high-speed wireless access revenue (excluding local
business carriers) will jump from $11.2 million in 1999 to
$3.4 billion in 2003.
And the wealth creation of this monster? That might get
even scarier.
Dr. Frederick Frankenstein: For the experiment to be a
success, all of the body parts must be enlarged.
Inga: So his head, arms, vould all have to be big?
Dr. Frederick Frankenstein: Yes.
Inga: He would have an enormous Schvonstuker.
Dr. Frederick Frankenstein: Well, yes, naturally.
Inga: Voof!
Igor: He's going to be very popular.
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