Bloomberg:Tech Invades Europe.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Tech Invades Europeÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ And it's not taking any prisoners.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ By Allison Kopicki, Bloomberg Personal Finance, March 2000
ÿÿÿÿÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bloomberg.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ In Europe, in essence, you can turn back the clock. About
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 50 million people are on-line in the continent's 16 largest
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ economies. That's about 18 percent market penetration--the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ United States circa 1998. But by 2003, the experts predict, 35
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ percent of Europe will be using the Web, a market of more than
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 100 million users, whereas U.S. Internet penetrationÿ over the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ same period is expected to rise from about 33 percent (110
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ million users) to about 40 percent ( 130 million users ), an
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ undeniably healthy increase butÿ no match for Europe's (or,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ soon, Asia's, but that's another story).ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Having seen these numbers,ÿ U.S. companies are investing in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ start-ups across the continent. U.S. money managers and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ venture capitalists are launching Eurocentric funds. And
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Europeans aren't sitting idle--they're primed to profit from the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ inspiring example of Yankee ingenuity that is Internet growth.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Conditions are favorable. The advent of the euro has increased
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the free flow of capital across country borders, and fledgling
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ small-cap exchanges like Germany's Neuer Markt and France's
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Nouveau Marche are channeling that flow.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "One advantage for European companies is that they've seen
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the movie," says Michael Parekh, Internet analyst for Goldman
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Sachs in New York.ÿ "They can telescope all the lessons."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Already initial public offerings of European tech stocks are
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ snowballing. There were 81 such IPOs in 1997, 96 in 1998, and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 185 in 1999, according to Bloomberg estimates. British prime
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ minister Tony Blair captured the moment in a speech to the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Confederation of British Industry last fall. Updating James
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Carville's famous line, he quipped, "It's the e-conomy, stupid."ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ For American investorsÿ the pivotal issue is not whether, but how
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ fast, Europe will grow.ÿ Mainly due to local telephone charges,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet access has not been cheap for consumers. According
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to Goldman Sachs research, 20 hours of Web surfing in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Germany, including the monthly Internet service provider's
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (ISP) charge, can cost $51.18. In the U.S, it's $20 for most ISPs'
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ monthly services. "Average usage of a European on-line service
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ or portal is about a quarter of the U.S.," notes Parekh, "which
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ means that consumers in Europe have really not begun to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ change their habits--yet."ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿ But the push for access is on, with pressure on telecoms
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ coming from both above and below. In November the European
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Commission, the executive body of the European Union, asked
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ its 15 member nations to commit to creating cheaper Internet
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ access through further deregulation of local telephone
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ networks, allowing for increased consumer choice and lower
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ rates on local calls.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ In the United Kingdom, Freeserve (FREE) started the ball rolling
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in September 1998 by cutting revenue deals with local telecoms
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ so it could debut free Internet access. AOL quickly followed
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ suit, and now more than 250 U.K. sites offer free access to the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Net. Despite such competition, Freeserve prospered when it
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ went public in July; by year's end the shares, which trade as
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ American Depository Receipts (ADRs), had risen 186 percent.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ For pioneering investors with an appetite for risk, Freeserve is
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ but one of scores of opportunities.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ As happened in the U.S., many tech companies' shares have
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ already ramped up in the initial hype of IPOs. Which stocks are
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ going to continue to pull in superior returns? For Tracy Stouffer,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ portfolio manager of Dreyfus Founders Passport Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (FPSAX), whose investments in global technology, industrial,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and service companies were up 87 percent for 1999, the criteria
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ are the same for European tech companies as for their
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ American cousins.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Stouffer looks for proven management, the ability to create
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ brand awareness, products that can grow with the Internet, and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ strategic alliances with successful companies. Although
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ identifying Europe's next household names, like any speculation
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in tech, requires a big dose of art along with the science, based
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ on the views of several dozen money managers and investment
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ banks, you'll soon be hearing these 10 names on active
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ investors' lips:
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Autonomy Corp (Easdaq: AUTN) A British company that
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ specializes in information-retrieval software for business,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Autonomy has seen its shares rise more than 1,000 percent on
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the Easdaq (Europe's electronic exchange that uses automated
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ quotations, and like Nasdaq, lists many tech companies) since
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ its initial offering in the summer of 1998. Clients are big and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ multinational--BellSouth, Lucent Technologies, Siemens, and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ PricewaterhouseCoopers, to name a few. Open Market
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (OMKT), an American software maker, is embedding
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Autonomy's pattern recognition know-how into its Internet
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ products, which are marketed globally. I/B/E/S predicted
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ positive earnings for Autonomy for 1999.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Baltimore Technologies (ADR: BALT) Sending highly classified
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ information via the Web? Baltimore's software encrypts
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ information, mostly for companies in the U.K., its home base,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ but also in the United States, where it made 10 percent of its
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ $16 million in revenues for the first nine months of 1999. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ stock has risen 209 percent since its IPO last October; Intel is a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ minority shareholder. With offices in 24 cities worldwide, the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ company has a good start on achieving global reach.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Competitors include the U.S.'s VeriSign (VRSN) and Canada's
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Jaws Technologies (JAWZ).
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Buecher.de (Neuer Markt: BEH) Germany will account for 40
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ percent of European on-line retailing by 2003, according to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ International Data Corporation estimates, and this bookseller is
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ poised to profit. Martin Sowa, an analyst for West LB Panmure
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in London, says Buecher.de isn't only looking to lock up the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ market in German-language books: "It's in acquisition mode,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ looking for candidates." Since its IPO last July, Buecher.de has
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bought on-line music retailer Alphamusic, Swiss bookseller
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Schneebeli (which runs buch.ch), and ZVAB, Europe's biggest
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet database of antique books. Sowa notes that the buys
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ make Buecher.de itself a likely acquisition target for Amazon,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ German media conglomerate Bertelsmann (which owns 41
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ percent of barnesandnoble.com), and T-Online, the ISP unit of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Deutsche Telekom, which is expected to go public this year.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ÿ Distefora Holding (Swiss Exchange: DSF). Since embracing
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the Internet early last year, this former electronics retailer has
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ seen its share price soar, returning 1,937 percent for the year.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Distefora's goal is to become Europe's leading supplier of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet access, Web-hosting, and e-commerce services to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ small and midsized businesses. "It's a one-stop shop where
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ companies can get access to the Web, their Websites designed
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and maintained, and transactions secured," says Scott Weldon,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ an analyst at Deutsche Bank in Zurich. In the U.S., companies
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ like Netopia (NTPA),Microsoft, and IBM are vying for the same
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ market. Weldon believes that among European software
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ makers, Distefora won't be easily overtaken by an American
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ rival: "Maybe Microsoft has the money, but then they have to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ find the technicians and salespeople, and that's where
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Distefora already has the advantage. They're up and running."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Icon Medialab International (Stockholm Exchange: ICON). As
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ part of its plan to list on the Nasdaq and gain greater access to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the U.S. market, this Swedish e-strategy developer purchased
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ New York Internet consultant Nicholson NY last November. The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ move paid off instantly--Icon stock rose 108 percent by the end
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ of the year--and gives the company more than currency. "Name
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ recognition is a goal," notes Brian Skiba, Lehman Brothers'
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ technology analyst in London, who sees Icon blunting the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ strong-dollar advantage of U.S. competitors like Razorfish
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (RAZF) and Scient (SCNT), which are looking to buy in Europe.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ While the company has yet to show profits, its sales grew at a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ rate of 354 percent in 1998 and its 18 offices stretch from
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Stockholm to San Francisco to Kuala Lumpur.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Integra (Nouveau Marche: INTG) France's top operator of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Websites is planning a rapid expansion in northern Europe.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ With a secondary listing of shares on Germany's Neuer Markt
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ in December, the company raised more than $100 million to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ fund a shopping spree over the next 18 months intended to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ snatch 8 to 10 Web-hosting companies. Though it can already
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ boast such big-name clients as Ikea, France Telecom, and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Siemens, Integra isn't expecting to post profits until at least
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 2003. Rather, the company is committed to spending on
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ marketing and branding itself across Europe.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Intershop Communications (Neuer Markt: ISH). Expect great
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ international growth from Intershop. The world's third-largest
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ vendor of e-commerce tools and software (behind Open Market
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and Broadvision [BVSN]) saw its shares rise more than 560
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ percent last year. Intershop's 8 percent share of the market is
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ expected to grow as more customers like MindSpring
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Enterprises and AltaVista use its software to provide shopping
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ capability on their Websites. Analysts at ABN Amro predict that
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Intershop's revenues will grow more than 100 percent, grasping
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 13 to 15 percent of the market, to exceed $3.8 billion by 2002.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ QXL.com (ADR: QXLC). Customers of this British on-line
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ auction house and direct competitor of eBay can sell
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ collectibles to each other in a variety of languages and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ currencies. In addition, businesses can participate, auctioning
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ off wine, antiques, electronic goods, and other items. Shares
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ rose 626 percent from its IPO in October to the end of 1999,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ giving it the power to purchase a 50 percent stake in the Dutch
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ software company ibidlive, and forwarding its plans to run live
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ auctions on television.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Scoot.com (ADR: SCOP). Last fall, Scoot hitched up with
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Vivendi, the world's biggest water company and an Internet
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ wannabe, to expand the British company's on-line business
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ directory all across Europe. But Scoot is more than just another
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Yellow Pages. It provides maps, business descriptions, and a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ unique free service that allows users to send a found number
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ straight to their cellular phone (provided they have Vodafone
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ service, one of Scoot's biggest partners). The ADR shares of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Scoot.com returned 696 percent in 1999. The largest jump
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ came in December in reaction to Scoot's partnership with
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ AltaVista, a move that will make each company's services
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ available on the other's Website.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Terra Networks (ADR: TRRA). Spain's leading Internet service
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ provider had a huge initial offering in November; it closed its
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ first trading day up 185 percent from its initial price of $13.41
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ and continued to climb, ending the year as Europe's biggest
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet stock, up 43 percent. Not bad for an Internet company
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ from a nation with 7 percent Internet penetration. Terra operates
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ portals not only in Spain and Portugal but also in Chile, Peru,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Argentina, Guatemala, and Mexico.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ So, is Baltimore the next VeriSign? Terra Networks the next
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ AOL? About half of the analysts we spoke to on both sides of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the Atlantic are betting on another scenario: that Europe's tech
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ successes will end up in American hands, that the AOLs will
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ buy the Terra Networks. Alan Loewenstein, co-manager of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ John Hancock Global Technology Fund in New York, explains,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "I'm biased toward U.S. companies that created the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ infrastructure and the technology. The AOLs and the Amazons
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ will dominate the world, partnering with companies in Europe
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ that have the top management and provide the best local
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ language services."ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Even boosters of Europe's prospects acknowledge that U.S.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ companies have a leg up in terms of scale. "If Yahoo! had
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ emerged in Europe instead of here, it would've taken a lot longer
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to get to profitability," Parekh says. "They would have had to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ build different language-based sites, local sites, local channels.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ It's easy to lose sight of this when you get all excited about new
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ things happening."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Lehman Brothers' Skiba agrees. "The aggregate wealth of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet will always be in the United States," he says, then adds,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "that's not to say there aren't good investment opportunities in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Europe."ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Indeed, buying stock in anticipation of a buyout can be a basic
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ strategy. "The endgame is very important," says Parekh. "The
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ability to partner with U.S. companies or, in many cases, being
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bought, are going to be elements, just like in the U.S. Look at the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ landscape here. You've got competitors partnering and vice
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ versa."
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Among the barbarians at Europe's gates are some very familiar
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ names.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ - Yahoo! (YHOO) has a huge presence in Europe; in October,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ more than a third of Web users in the U.K., France, and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Germany visited Yahoo!, according to Media Metrix.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ - AOL Europe, a joint venture of America Online (AOL) and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Bertelsmann, has the first-mover advantage as a pan-European
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ ISP. Goldman Sachs estimates that it currently has more than
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ two million subscribers.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ - In just the first quarter of 1999, 22 percent of Amazon.com's
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ (AMZN) sales, totaling $25 million, came from its German and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ British sites, according to analysts at Thomas Weisel Partners.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The company has established two distribution centers in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Europe, to provide most deliveries within 24 hours.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Behind the scenes, America's infrastructure kings--makers of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the technologies that power the Internet--are almost guaranteed
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ to see huge gains as Net use mounts around the globe. Half of
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ PSINet's (PSIX) Internet traffic is already international;
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ company CEO William Schrader has an aggressive plan to link
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the world with cheaper, faster ISPs called Internet Super
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Carriers (ISCs). Exodus Communications (EXDS), which hosts
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet systems for large companies, is the market leader in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Europe. More than half of Oracle's (ORCL) software business
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ is overseas.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ The great unknown for American companies in Europe--the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ loose thread that could unravel their dreams of market
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ dominance--is the future of wireless communications.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Telephone landlines on the Continent may have a bad rep, but
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ with a uniform technical standard for wireless telephony,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ "Europe is ahead of the U.S.," Parekh says. Matthew Nordan, a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ senior analyst at Forrester Research, observes that in Italy
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ there are now five times as many cell phones as connected
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ PCs. By 2004, he forecasts, a third of Europeans will log on to
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ the Internet through mobile phones: "For many there the first
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ on-line relationship will happen through the cell phone, not the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ PC. Amazon and others could get displaced by companies that
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ adapt their e-commerce to phones."ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ How big what Skiba calls the "m-commerce space" (for
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ mobile-commerce) gets in the near future depends on
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ still-developing telephone technology. "By the middle of this
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ year, a second generation of phones will be cheaper, and by
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 2001 cheaper phones that tap the Internet will be widely
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ available," Nordan says. By 2003, Forrester projects, there will
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ be more mobile phones and palmtop computers accessing the
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Internet than personal computers.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Signs of this future are already upon us. Sonera (ADR: SNRA),
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Finland's largest phone company, has pioneered customizable
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ services that allow users not only to read flight schedules and
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ stock quotes but also to buy tickets and shares via mobile
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ phone using a wireless application protocol.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ And if there were any doubt that American companies are in a
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ fight, consider that Sonera, besides making extensive
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ acquisitions in Eastern Europe, entered the U.S. market last fall,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ buying a stake in Powertel (PTEL) and negotiating for 8 percent
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ of VoiceStream Wireless (VSTR)--even as Microsoft
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ announced a $1 billion deal with Stockholm phone maker
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Ericsson (ERICY) to develop wireless Internet technology.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Smart investors will want to get into the fray. A few well-placed
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ bets on Europe over the next few years, and you can start
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ packing for that long-dreamed-of Grand Tour.ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Staff writer Allison Kopicki regularly covers tech investing.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Companies and sources mentioned in this article:
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Goldman Sachs
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 212-902-1000
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.gs.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dreyfus Founders Passport Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 800-554-4611
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.dreyfus.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Deutsche Bank
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 49-69-910-38080
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.deutsche-bank.de
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ John Hancock Global Technology Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 800-225-5291
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.johnhancock.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Forrester Research
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 617-497-7090
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.forrester.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ IPO Plus Aftermarket Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 888-476-3863
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.ipo-fund.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Dresdner RCM Global Technology Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 800-726-7240
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.dresdnerrcmglobalfunds.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Montgomery Global Communications Fund
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ 800-572-3863
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ www.montgomeryfunds.com |
