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Technology Stocks : Satyam Infoway Ltd-(Nasdaq:SIFY) -- Ignore unavailable to you. Want to Upgrade?

To: Mohan Marette who wrote (658)	2/10/2000 7:45:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 1471

Merrill's Net report treads warily on Asian B2C sites, but is bullish on India Charles Assisi -FEx Mumbai, Feb 10: Matei Mihalca, head of Asia-Pacific Internet research at Merrill Lynch, proposes two approaches for investors looking at Net stocks in the Asian markets. One, "to invest on the edges of the Internet space, where there are underlying businesses that can serve as a stock price cushion in the event of a shakedown. The Internet induced upside may be more limited, but so would the downside." "And two, invest in a new breed of incubators or accelerators -- essentially venture capital by another name -- where one has access to a bouquet of Internet plays, thus hedging single-company risk." The advice, his January 2000 report argues, is based on a fundamental reality. That in an industry "where business models are changing rapidly and levels of confidence about stock picking are still growing, such an approach should hold significant appeal to investors." The report goes on to add a word of caution. "...access, portal or B2C e-commerce are questionable business models in general and in Asia, in particular." The primary reason being the fact that developments in the access business is changing from metered usage to either flat-fee or free usage. The decline in revenues from this stream is subsidised by advertising. In the Asian context though, advertising is scarce. That, in turn, makes life increasingly difficult for such players. There is a caveat to this though. The report points out that "despite the paucity of potential advertising revenues, we advise that investors seek exposure to pure Internet areas even when ad spending is now limited and revenue models not crystal clear, provided that the market opportunity is significant..." "China and India come to mind as such long-term opportunities." While on the Asian Internet market, the report says that "of all the Asian markets, we like Korea best on account of web development, strong advertising, large population, and per-capita wealth...We believe that Taiwan may be the next." There are a couple of other typically Asian reasons that the report argues are not exactly conducive to B2C e-commerce -- fragmented markets that prevent scale, modest infrastructure, and crowded housing that makes offline shopping both a pleasure and an escape. Therefore, the report continues, "...the Internet promise is much more than simply transposing an offline model to a new medium, and that models based on the unique character of the Web might stand a greater chance to succeed."One such "killer app" is e-mail. Free e-mail newsletters are emerging as an important challenge, or complementary model, to the traditional portal, the report points out. This, essentially because of the cost-effectiveness. There are compelling numbers that support such e-mail. "...the click through rates for one or two advertisements in an e-mail newsletter (text plus a hyperlink) are 10-12 percent, vs 0.1-0.3% on a Web portal in Asia." Incidentally, the Merrill Lynch team is bullish on VSNL, which "enjoys some government protection on the international front while enjoying leadership in the ISP segment." Satyam Computers and Wipro find mention among software companies worth watching closely.