These two bear watching.. although XLA was already mentioned.
moneycentral.msn.com
Xcelera.com: the distributed Internet
The Web as we know it today largely came about as a glorious accident, with no central organization or individual designing
it as an efficient system. It's not much more sophisticated than the telephone system in the early part of this century. Its
zillions of routers, switches and servers are individually very sophisticated, but in aggregate are very poorly organized.
Over the next three to five years, one of the most important technologies that will fix the Net and make it work much more
smoothly will focus on content distribution. Here's why: The problem of speed at the desktop has largely been solved to the
satisfaction of most mass-market users with computers running fast Pentium III chips and a lot of random-access memory.
The problem of speed at the network level is being solved by telephone companies laying hundreds of thousands of miles of
fiber-optic lines, launching satellites and sending data as "packets" of digital bits rather than analog waves.
But there is still another big problem on the horizon if you think that video and electronic commerce will be a huge draw on
the Web over the next 10 years: The content (ranging from gigantic video and audio libraries to the humongous databases of
Amazon.com (AMZN), Yahoo! (YHOO) and Ford Motor (F)) still will travel too slowly to users from Web "farms" across the
United States, and over to Europe and Asia. The files are just too big, no matter how big the pipe, or "bandwidth" over
which it travels.
That's where content-distribution service providers come in. The best-known one, Akamai Technologies (AKAM), went
public in the fall and quickly had a market capitalization of $26 billion, despite having less than half a million dollars in sales.
But some industry observers believe that Mirror Image Internet, a subsidiary of tiny Xcelera.com (XLA), has a more
ambitious and more technologically advanced solution. Mirror Image has plans to install content servers at more than 120
points on the Internet backbone around the world, and its technology is adept at keeping the content of a Warner Brothers
motion picture or Amazon.com storefront fresh.
It's essentially intelligent storage -- something the Web sorely lacks. I first mentioned Xcelera.com as a potential 10,000%
gainer on Sept. 29 at around $23, and it's since run up 550% to $146 following an investment and endorsement by
Hewlett-Packard (HWP), the hiring of a well-regarded EMC (EMC) and IBM (IBM) executive as chief executive of Mirror
Image, as well as announcements that its Swedish-born, Connecticut-based founders have plans to acquire many more
similar Web-infrastructure companies in Europe. With a market cap of $1.7 billion, I think this one has a clear shot at $25
billion in market value, and potentially a lot more if it comes to be valued in a fashion similar to CMGI Inc. (CMGI) or Internet
Capital Group (ICGE).
Sensar: distributed broadband over wireless
In January 1997, the shares of a little analytical instruments company in Utah named Sensar (SCII) hit a high around $57.
After that it was all downhill, with shares dropping to $1 by the spring of 1999. Following two years of business setbacks,
the firm was essentially moribund. It had sold all of its operating units, and was little more than a shell corporation holding
about $6 million in cash.
So why did the shares suddenly begin to levitate in April on virtually no news -- quintupling to $5 in April, and then
doubling again to $10 in November and reaching as high as $68 by the last week of December -- a fabulous one-year gain of
3,362% that beat virtually every other stock on the planet?
A study of press releases and federal regulatory documents filed in the autumn reveals that Sensar engaged in a reverse
merger with two Israeli companies that have patents on intriguing technologies that could turn every cellular phone easily
and cheaply into a browser capable of receiving streaming, real-time color video and data on demand from the Internet.
Rather than go through the trouble of trying to find a U.S. brokerage that would take them public, the owners of Israel-based
ITES Corp. and Net2Wireless simply found a Nasdaq shell to crawl into. The board controlling the former Sensar quietly
resigned, and the new managers took over.
The real ramp in the share price came in late December, when it was announced that the former head of ECI Telecom (ECIL), a
highly regarded global telecommunications equipment company based in Israel, had joined as the odd little firm's new chief
executive. That got the attention of money-management firm SAC Capital in Connecticut, which has since acquired a 7%
stake.
Soon, the whole world will find out whether Net2Wireless' technology works because the Israeli affiliate of United Kingdom
cellular giant Orange (ORNGY) is launching a pilot starting this month. If all goes well, Sensar very quickly could start to
license its intellectual property to cellular providers worldwide, and quickly could zoom to a market cap approaching that of
wireless browser licensor Phone.com (PHCM) -- $15 billion. Considering that Sensar today has a market cap of just $173
million, that gets you close to a 10,000% gain without breaking a sweat. (Yes, that's a big if.)
(PLUG also mentioned, here is the piece. Not sure if it's a fundamental short but should be a technical short on Friday's spike)
Plug Power: distributed electricity
The electric power industry is one of the most inefficient and over-regulated in the world. You may not realize that far more
power than is necessary courses through the United States' power grid, as it is oriented toward peak usage periods that
rarely occur. Even if you are away from home, your power company is providing electricity for you to tap at a moment's
notice. While some of that power is generated by decent dams like the Grand Coulee in Washington, most of it still is created
at environmentally harmful and resource-wasting plants stoked with coal dug out of the earth in vast, ugly pits.
Plug Power (PLUG) may have a better solution. It designs and develops power-generation systems for homes, apartment
buildings and commercial uses that rely on something called "proton exchange membranes," or fuel cells that generate
electricity from hydrogen gas without combustion. The units are something like a giant battery, fueled typically by clean
natural gas. I think the market for Plug's units could be huge over the next 10 years. One good way to think about the
opportunity was suggested by a Merrill Lynch analyst. He compared the coming power-distribution revolution as similar to
the revolution that broke up mainframe computing. In this paradigm, Plug's units are like personal computers -- bringing each
person the power that they need, when they need it, without reliance on a central source.
Plug holds key patents to the main elements of these units, and has a terrific distribution partner in General Electric (GE). Plug
and GE's Fuel Cell Systems unit plan to start selling them to homeowners in January 2001. With a stock price of $28.25 and a
market cap of $1.2 billion today, a 10,000% gain would take it to $120 billion by 2010. |
