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To: H James Morris who wrote (99166)	4/5/2000 8:46:00 PM
From: John Chen	Respond to of 164684

HJM,re:"Drugstore.com". This is disaster for e-tailers. This 'dream/virtual space' ends too soon. Read the lines: "We partnered to get big fast". <- Thanks for the free loan from the capital market. "As we got bigger ... on our own". <- back to reality. It took Walmart years to get the 'infra-structure' and 'financial' in places, it only takes 'e-tailers' whatever the capital market willing to throw in the money. The problem is: now are we still nuts or we are for real. Solution: more new math. Reality is much harder to 'grow' and you have 'bottom lines' and 'profit columns'.

To: H James Morris who wrote (99166)	4/5/2000 11:33:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

Internet Stocks' Drubbing Goes Global, Spurred by Recent Volatility on Nasdaq By CRAIG KARMIN, HENNY SENDER and DOUGLAS APPELL Staff Reporters of THE WALL STREET JOURNAL Investors across the globe are turning against Internet stocks with a vengeance, sending prices plunging for some of the same companies that were lauded as the most visionary just a short time ago. The world-wide technology drubbing has been building for nearly a month, but it acquired new urgency this week as trading in Nasdaq Stock Market issues succumbed to new extremes of volatility. The biggest casualties in both Europe and Asia have been many of the newly minted "dot-com" companies. Their limited revenue streams failed to mute excitement during the initial-public-offering phase earlier this year, but investors are suddenly abandoning them in the secondary market. "I've already started lightening up on Internet and e-commerce stocks that have no earnings and extreme valuations," says Vincent Willyard, a global portfolio manager at Duncan-Hurst Capital Management in San Diego. As fund managers run for cover, their actions are having a ripple effect that could shape the future of the Internet sector in the weeks ahead. Technology companies that count on a lofty share price as a currency for acquisitions may find that this path to expansion is no longer available. At the same time, pressure is building on hundreds of European and Asian startups to delay their IPOs, or at least reduce the size or price of the issue. Some have already succumbed: HSBC Investment Bank Asia said Wednesday that ColbyNet, a Hong Kong retailer with a business-to-business Internet strategy, would postpone its IPO until market conditions improved. "There's no way I'm going to buy an Internet IPO now," said Eric Ritter, portfolio manager of the Driehaus Asia-Pacific Fund in Chicago and a big buyer of IPOs and technology shares last year. "You have to go back and take another look at the Old Economy stocks." For all the tough talk, the re-evaluation of technology shares hasn't been entirely on the downside: Prices for Taiwanese hardware manufacturers and Indian software makers are steady, even higher, as they join select Old Economy names as safer harbors amid the Internet storm. Moreover, Nasdaq's relative calm Wednesday offered some hope that the fiercest winds may have passed. But after this week's mayhem, analysts suggest, some of the underlying assumptions about a global high-tech investment strategy are being reconsidered. Says Brian Gendreau, an emerging-markets equity analyst at Salomon Smith Barney in New York: "People who've been buying technology companies across the globe in hope of diversifying their portfolios, will not hold out that hope anymore." In Asia Wednesday, New Economy stocks in Japan were among the bigger losers. "The New Japan is being massacred," says Jonathan Bolton, a director with Schroder Investment Management (Japan) Ltd. in Tokyo. "Thanks to what has been happening on the Nasdaq, the panic of March has extended into April at an exponential rate." Among the hardest-hit were the shares of Internet investment houses Softbank and Hikari Tsushin; Hikari shares have fallen by their daily limit for three consecutive days, and have dropped by 75% since their high in mid-February. Hong Kong tech stocks hardly fared better. At the height of Internet mania in February, people lined the streets of Hong Kong for the chance to buy the IPO of tom.com. Wendesday, investors queued for the opportunity to discharge the unfashionable stock, sending the share price down 16% to 9.05 Hong Kong dollars. Hongkong.com, meanwhile, indicated last week it intends to make an acquisition that it planned to finance with cash and new shares. Ten days ago such an announcement would have boosted an Internet company's share price. But instead, Hongkong.com's share price has dropped. The company listed at 1.88 Hong Kong dollars last month but closed Wednesday at HK$1.61. The fall in the share price of Pacific Century CyberWorks has even sparked talk that its planned takeover of Cable & Wireless HKT in a cash-and-stock deal could be in peril. The shares plunged 11% Wednesday to HK$17.95 and are now 48% off their February high. Before this week, fund managers believed that anywhere from 100 to 200 companies planned to list on Kosdaq, South Korea's second board. And with many Japanese tech companies completing their first full fiscal year last week and becoming eligible for a listing on Tokyo's new Mother's board, dealers said they expected 70 listings in the next few months. Many of these IPOs will still go ahead but investors are likely to be very picky because they can no longer assume that such stocks will soar as soon as they're listed. Those companies and their investment banks "are all having very difficult conversations" now, said Scott Ferguson, the Hong Kong-based head of equity capital markets with Salomon Smith Barney. The theme is much the same in Europe, where the decision by T-Online to reduce the offering price of its much-ballyhooed IPO due later this month has damped sentiment. The region's secondary markets that rely heavily on young technology-oriented companies are also floundering. France's Noveau Marche tumbled 11%, while Frankfurt's Neuer Markt slid 4%. Once white-hot IPOs have also fallen on hard time. Most notoriously, World Online in the Netherlands closed Wednesday down 8.6% to 16 euros -- nearly 63% below its IPO price of March 17. Chairwoman Nina Brink now faces a potential shareholder lawsuit following the revelation that she sold most of her shares ahead of its IPO. For now, many growth-oriented portfolio managers say they'll happily take refuge in once-scorned Old Economy shares. Mr. Ritter at Driehaus has been adding Japanese retail and consumer companies, while Mr. Willyard at Duncan-Hurst has been rummaging through European pharmaceuticals.