Northwest Stocks Recently Unsteady, But Remain Popular with Investors
Apr. 7 (The Seattle Times/KRTBN)--Last Sunday morning two men in their 30s
lingered over eggs and coffee in the restaurant at Madrona Links Golf Course in
Gig Harbor. Ahead lay a warm, sunny day on the course. Instead, all Jon Cook and
Mark Deitzler could talk about were stocks.
"First thing Monday you should go out and buy some Avenue A," advised Deitzler,
an attorney who lives in Tacoma. "A few weeks from now you won't be sorry."
Cook, who manages construction projects and is relatively new to investment,
pondered the advice -- and what he would have to sell in order to take advantage
of the dot-com stock tip.
The conversation might have ended with the payment of the bill, or as the two
limbered up on the driving range, but it didn't. Down the first fairway they
talked stocks, and the conversation was still going strong 4 1/2 hours later as
they walked off the 18th green.
The episode could have been written off as a couple workaholics who couldn't
give it a rest. But playing the stock market has become this region's favorite
new pastime, even as the markets fluctuate wildly and newfound fortunes hang in
the balance.
Piper Jaffray's Jack Eaton lives in Manhattan but has a very homespun way of
explaining what's been happening to Northwest dot-com and technology stocks over
the past few weeks.
"They're taking about half of 'em out back behind the barn and shooting them,"
explains Eaton, managing director of the company's portfolio and strategy group.
Indeed they have been, leaving companies and investors jittery at the prospect
of an uncertain future.
Some of the region's best-performing stocks last year have taken a hit in recent
months:
--F5 Networks, the Internet company that led the way in 1999 with a 1, 040
percent advance, is down 40 percent so far this year. Ka-boom! $1 billion in
market value. Gone.
--Western Wireless, which sells cellular service in rural America, last year
gained 850 percent and was ranked No. 4. Bang! It's down nearly $1.2 billion
this year.
--InterNap Network Services, which provides high-speed Internet connections, had
a 765 percent increase in the stock price last year. So far this year, the stock
is down 48 percent, a whopping $5.7 billion lost.
--Onvia.com, an e-commerce company that helps small businesses communicate, was
first publicly traded Feb. 29, and ended its first month at about the same price
as it began. But between its opening day, when a share cost $21, and yesterday,
when it closed at $17, stockholders had quite an emotional and financial ride.
On March 1, a day after going public, the company's stock closed at $61.50 a
share. The price has since slid back to reality, even though the company
provides beds and brings in three meals a day so employees are able to work
around the clock.
--drugstore.com led the decline of Northwest stocks. Despite its pedigree of
big-name investors and partners, including Amazon.com, Microsoft co-founder Paul
Allen and Starbucks Chairman Howard Schultz, the stock's value declined by
nearly 64 percent in the first quarter this year. Peaking at $70 Aug. 28, it
closed yesterday at $12.063.
Northwest stocks are the New Millennium's answer to the California and Alaska
gold rushes, and neither of the get-rich-quick schemes are for the faint of
heart. F5 Networks started in the Internet traffic-management business in 1996
and went public last June. By the end of the year the company was valued at $2.4
billion -- more than Alaska Air Group and Airborne Freight combined.
In the first seven months his company was publicly traded, Jeffrey Hussey, F5's
chief executive officer, went from having modest wealth to accumulating $316.5
million in cash and stock. But as the market value of his company has declined,
so has Hussey's net worth.
To protect himself and his employees -- many of whom received stock options with
their benefits -- from the emotional highs and lows that can accompany the
market's wild fluctuations, Hussey has developed several defenses. He has
decided not to worry about people more concerned about the timing of their
investment than the time it takes to build a company.
And he has concluded the stock market is simply not a good, short-term judge of
how a company is doing.
"We talked about it for a long time before we got access to the public markets,"
says the 38-year-old Everett native. "We talked about how we couldn't pay
attention to what's going on in the stock market because the stock market's
always wrong. It's either too expensive or too cheap. We pay as little attention
as possible to the daily gyrations. We've got too much else to do."
F5's Web site displays the articles written about the company, and Hussey takes
considerable pride that his company wasn't listed in a March 20 cover story in
Barrons that predicted when 200 money-losing Internet companies would "burn
through" their cash.
Included on that list were Amazon.com (10.2 months) and drugstore.com (8.4
months).
The stock market's ups and downs appear not to have filtered down to the
businesses that sell to the newly rich. Five years ago Bellevue BMW sold about
50 new cars a month. Over the last year that number has risen to 140 and the
company has had trouble keeping a supply of new cars on its lot.
In January a customer walked in and paid cash for a new BMW sedan. The $48,000
represented the money he'd made the previous month when Qualcomm's stock peaked
just before the New Year. Another bought a BMW and then walked across the street
and purchased a Ferrari, eventually purchasing nine new cars in all.
While numerous Northwest stocks have taken a dive in recent months, most remain
on the plus side.
Sharon Case, who began investing in high-tech stocks a couple of years ago, was
a nervous wreck most of Monday, when high-tech losses drove down the Nasdaq
composite index. But she concluded there wasn't much she could do. She is still
far ahead of the game and says she can't sell without being taxed on her capital
gains.
The rapid growth in stocks continues to change peoples' lives.
Deitzler, the attorney, who along with his wife, Kathy, manages the
family's stock portfolio, initially set out to earn 10 to 15 percent annually on
his investments. Last year his return topped 90 percent, reflecting some dot-com
"fliers" he took to augment his core stocks. The allure of business caused
Deitzler to rethink his chosen line of work. He has gone back to school to get a
master's degree in business administration, and recently was approached by a
dot-com startup company and offered a job.
"I was getting close to 40 years old and started looking at the world a little
differently," he said. "I figured if I didn't figure it out, the world would
pass me by. I started investing out of self-preservation and I realized I'd
better do something to get educated."
A 500 percent increase in Marc Savdie's portfolio over the last three years gave
the 30-year-old former Boeing worker the freedom to quit his engineering job in
Everett and move to San Diego, where he's starting a venture-capital company.
"I wanted to go to where I wanted to live, not where some company wanted to move
me," he says.
Savdie began investing when he was 21. He had $4,000 in the bank back then and
put it all into Micron Technology. Within months it had grown to $36,000, which
he eventually spread among national and locally based companies including
Microsoft and RealNetworks, which he bought at $16 a share. The company's stock
has split twice, 2 for 1, since last May. The stock reached $96 in February but
yesterday closed at $50.
"I got really hooked and that (trading) is all I do now," he says. "I have a lot
of day-trader friends who are in it for the rush, but that's not for me. It
satisfies my hunger for information. From 5:30 (a.m.) to 1 o'clock (p.m.), I'm
glued to the computer."
By Robert T. Nelson |
