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To: H James Morris who wrote (101166)	4/16/2000 2:38:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

Talk about bad timing: Europe's top Internet stock faces tough first trade (Adds background, future Nemax 50 listing 10-11) By Melanie Cheary FRANKFURT, April 16 (Reuters) - Europe's biggest Internet service provider enters an unfriendly market on Monday, with its first day of trade threatened by an almost 10 percent slide on the technology-laden U.S. Nasdaq at the end of last week. But parent company Deutsche Telekom AG has sought to limit damage to shares in T-Online by setting its issue price at the bottom end of its offered price range and analysts say this will give the stock room to rise. T-Online's shares will be issued at 27 euros -- the lower end of its 26-32 euros price range and analysts said at the weekend that this will enable small investors, receiving about half of the offered stock, to hold onto their shares. Analysts said that T-Online's debut will also see institutions seek to snap up whatever shares they can in the market, pushing the stock above 30 euros in the short-term. By year-end T-Online is expected to rise to about 45 euros -- a 66 percent surge from its issue price. T-Online shares debut on Monday on Frankfurt's Neuer Markt -- the bourse's technology-laden market segment -- amid global jitters about investment in the tech sector. T-Online's low issue price met expectations that Telekom would aim to ensure that as many investors as possible did not sell their shares immediately amid the tumble in technology stocks and especially after Friday's plunge on Nasdaq. ``I think the issue price is very reasonable. Telekom has not ignored the current market conditions,' said Christoph Vogt an analyst at MM Warburg in Hamburg. ``With this issue price, Deutsche Telekom can ensure that small investors won't lose out. The likelihood that small investors will hold onto their shares for one year or more is pretty big,' Vogt added. Looking further ahead, T-Online is set to list on the Neuer Markt's bluechip index, the Nemax 50, on June 19. Fund managers have described T-Online as a top quality Internet stock and say it will enjoy greater demand ahead of its Nemax 50 entry in two months' time as portfolios are adjusted to include it as a bluechip. MAN IN THE STREET Telekom is floating about 114 million T-Online International AG shares, about 10 percent of the company. The total volume of the issue will be divided almost equally between institutional and retail investors. ``At this level (27 euros) Deutsche Telekom has set a price which reflects responsibility in the current market conditions and its continuing responsibility to retail investors,' said the former German phone monopoly which has been running a high-profile, nationwide T-Online IPO marketing campaign. Telekom did not detail by how many times the retail tranche was oversubscribed but sources told Reuters on Friday it was 20 times with the institutional tranche 12 times oversubscribed. But Telekom said the T-Online IPO -- valued at 3.078 billion euros if the greenshoe option is exercised -- was over 20 times oversubscribed and not all orders would be met or met in full. Retail investors who responded to the T-Online questionaire and received a registration number will get 35 shares according to the already stated preferential treatment, Telekom said. But retail orders submitted without a registration number will be allocated according to a ballot. One out of every three orders will each be allocated 25 shares. T-ONLINE FACES UNFRIENDLY MARKET News of the fastest U.S. inflation growth in five years panicked investors on Friday. The Dow Jones industrial average (^DJI - news) lost a record 617.78 points to close at 10,305.77 points and the Nasdaq, already hurt by a worldwide tumble in technology stocks, was battered almost 10 percent lower to close at 3,321.29 points. German brokerage Lang & Schwarz said that the Neuer Markt -- on which T-Online will make its debut and which has lost 29 percent of its value since March 13 -- was likely to lose more than 300 points from its Friday close of 5,745.88 points.