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To: ztect who wrote (19072)	6/18/2000 12:30:00 PM
From: Dale Baker	Read Replies (2) \| Respond to of 118717

A very good article - they are right to focus on Web site technologies and "sticky" Web sites that keep people around and keep them coming back. So much of the popular press has stereotyped "dot.com's" in the panic stories about those that fail. Funny how I never see any press about the MAJORITY of new small businesses that fail in the US every year. And analysts are no help - as we suspected, the studies show that they are right up there with screen doors on submarines. From the New York Times today:"Equally difficult to fathom are company research reports penned by Wall Street analysts. While these reports include a great deal of data, they can also be extremely biased. Researchers whose firms have or want to have investment banking relationships with the companies they follow are more inclined to be positive in their forecasts and assessments than those whose firms do not have such kinships. Exactly how much more positive? According to five years of research by Siva Nathan, associate professor of accounting at Georgia State University in Atlanta, analysts whose firms have banking relationships with companies they follow issue earnings forecasts that, on average, are 6 percent higher than forecasts issued by other analysts. Professor Nathan's research also shows that analysts writing about companies whose securities have been underwritten by their firms put out 25 percent more "buy" recommendations, 46 percent fewer "sell" recommendations and 23 percent fewer "hold" recommendations than other analysts. In another study, three professors examined analysts' forecasts from 1982 to 1997 to see what incremental value they provided to investors over and above the data publicly available in companies' financial statements. Eli Amir at Tel Aviv University, Baruch Lev at New York University's Stern School of Business and Theodore Sougiannis at the University of Illinois at Urbana-Champaign concluded that analysts, over all, made only a modest contribution to investors' results beyond what could be divined from the financials. The study found that analysts provided the most added value in forecasts on technology companies, whose financial statements were the least informative about new product developments, for example. Analysts also contribute more to investors' returns in stocks of companies that report losses than in those with profits. And analysts provide more value to investors during economic boom times than during recessions. But over all, the professors said, the results suggest that analysts generally react to changes in stock prices rather than cause them. Which makes it seem that investors would be well advised to shut out all the yammering about earnings expectations, consensus forecasts and whisper numbers and focus instead on the financial information reported by companies themselves. Obviously, investors are deluged with data today. This is, after all, the information age. The Enlightenment, however, it is not.