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To: Thean who wrote (12056)	2/17/2000 8:22:00 AM
From: drsvelte	Respond to of 14427

Thean - Interliant to report after the close today. I am currently long EXDS and ISLD in this group. From Briefing....(1/25) Trader's Edge - Web Hosting Stocks [BRIEFING.COM - Damon Southward] EBITDA, pro-forma adjusted cash flow and operating losses. This is the lexicon common among telecommunications companies and cable system operators -- capital intensive enterprises that are generally allowed to hemorrhage capital as they build out their networks. These are companies that are investing heavily in tangible assets, not advertising and anchor tenant deals. As the build out nears completion, these companies evolve into cash machines. Web hosting/application software outsourcing companies have similar potential. The Opportunity Forrester Research estimates that the worldwide market for Web hosting services will grow from $0.9 billion in 1998 to $14.6 billion in 2003, a 76% compound annual growth rate. The research firm expects the worldwide market for outsourcing application software products to expand from approximately $1.0 billion in 1997 to over $21.0 billion by 2001, a 111.1% compounded annual growth rate. The Players Company Market-Cap Sales (Trailing) P/S Ratio 1999 EPS 2000 EPS Exodus (EXDS) $15 bln $162 mln 92 ($0.63) ($0.41) Interliant (INIT) $1.3 bln $30.4 mln 43 ($1.63) ($2.37) Data Return (DRTN) $1.6 bln $4.2 mln 381 ($0.37) ($0.49) Digex (DIGX) $3.7 bln $45.9 mln 81 ($1.25) ($1.95) USinternetworking (USIX) $3.7 bln $24.4 mln 152 ($2.88) ($2.57) NaviSite (NAVI) $2.2 bln $14.7 mln 150 ($2.79) ($1.69) Digital Island (ISLD) $3.9 bln $12.4 mln 315 ($1.69) ($3.04) Heady Valuations With the stocks on average trading at 173 times trailing 12-month sales, we can not in good conscious recommend any of these issues as investments. Would wait for a 50% pullback in the overall Internet group from its highs before venturing into these stocks in search of long-term investment candidates. Trading View Exodus Communications (EXDS 88) is the most highly regarded of these names. Since coming public in March of 1998, the stock has soared more than 4500%. The issue has a history of holding up well amid corrections in the Internet space, making new highs while the remainder of group leaders are breaking down. The stock has near-term support levels at $80, $75... From a long-term perspective, would be an accumulator of the stock at $55 gap support. Digital Island (ISLD 110) has become a market favorite over the past month, rallying as much as 125% since December 8 announcement of agreement with Inktomi (INKT) and Sun Microsystems (SUNW) to deploy up to 5,000 Sun servers equipped with Inktomi's Traffic Server and Content Delivery Suite to accelerate Web-site performance for consumers and e-Business Web sites. Under the agreement, both companies made equity investments in ISLD... The stock has pulled back 30% from its $157 all-time high reached December 10. Despite ridiculous valuation, this is a stock that could quickly heat up again. Would advise trading issue as a momentum play, which entails looking to buy stock early when demonstrating strength in a down market, picking up stock at intraday support on break-out days with anticipation of last hour rally and anticipating strength in stock as it nears key technical levels such as 52-week highs. With a trailing Price/Sales ratio of 43, guess Interliant (INIT 28 7/8) would be considered the bargain of the bunch. However, would feel more comfortable entering issue on a pullback to the $21-$21 1/2 range, positioning for an attempt on its $35 3/8 all-time high. Should interest rate jitters and valuation concerns continue to put pressure on tech group, INIT could very well tumble through $21 level. Would become an aggressive buyer of the stock in the $16.50-$17 range.