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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: wl9839 who wrote (21245)	8/5/2000 7:30:09 AM
From: wl9839	Read Replies (1) \| Respond to of 22640

Feeding Frenzy For Latin American Internet Short-Lived By AMY GUTHRIE Of DOW JONES NEWSWIRES NEW YORK -- Maybe it was Ricky Martin. Maybe it was the attention of large U.S. Internet companies. Or maybe it was astronomical growth projections for Internet usage in Latin America. But in the first few months of 2000, the region's Internet space was flooded with investors carrying thick wallets. Dedicated players haven't retreated, but the short-lived free-for-all is definitely over. International Data Corp. figures predict that the number of Internet users in Latin America will increase nearly fivefold to 29.6 million people online in 2003, from approximately 6.2 million at the end of 1999. Faced with such an opportunity, virtually anything with a dot.com became a selling point earlier this year. When Dow Jones Newswires reported in January that Brazilian online retailer Americanas.com planned to list on the Nasdaq by year's end, share prices in the company's only shareholder, Lojas Americanas SA (E.LJA), soared 14% in unusually heavy trade. Now the sentiment is considerably different. The word Internet is almost an eyesore, and if you blink, you may have missed another Initial Public Offering being pulled. As many as 12 Internet companies serving the region were expected to list on the technology-rich Nasdaq Composite this year, but now one or two may come to market at best. AOL Latin America Experience Strikes Fear In Some In recent weeks, several dot.com executives have voiced concern over the pitfalls of U.S. mega-star America Online Inc. (AOL) in bringing its Latin America venture public. "If AOL can't get make it, we're all in trouble," said a chief executive at a vertical portal. Underwriters were forced to slice AOL Latin America's valuation in half this week, and the share's coming out party has been continually delayed. Yet not everyone should be runnning for the exits. Many argue the difficulties of AOL Latin America's IPO highlights the selectivity of well-informed investors, rather than spelling out doom for Internet companies targeting the region. "AOL's misfortunes reflect the reality that AOL only has a foothold in Latin America. It reflects their position, not the (regional) market as a whole," said Lucas Graves, a Latin America Internet analyst with market research firm Jupiter Communications. Will Landers, an Internet analyst with Credit Suisse First Boston, maintains, "It's not a Latin America issue. The global market for tech is not looking to invest in these (vertical portal) companies right now." Brazil's UOL Still Attracting Interest Even so, there are some exceptions. Several fund managers dedicated to the region have singled out Brazil's leading Internet Services Provider, Universo Online, as a company in which they might like to invest. "In general these companies tend to be overvalued, but the cream of the crop usually performs well. And UOL is one of them," said Andrew Phillips, of Pareto Latin American Partners, which manages $30 million in assets. UOL, as Universo is known, has a five-year track record in the region - versus AOL's eight months. But like many companies that have expressed a desire to tap the market, UOL has not rushed to file its planned IPO with the U.S. Securities and Exchange Commission. Earlier this week, UOL investors relations chief Ricardo Florence told Brazilian news agency Estado the company was waiting for an "opportune moment on the market." Investors Come Out Of The Ether Obviously the Nasdaq isn't the only source of funding for Internet companies. A smattering of listings in Brazil - such as Internet incubator IdeiasNet's $24.6 million placement in June - have been greeted by investor appetite. However, observers say small local listings aren't a viable alternative for the start-ups because they won't generate the necessary cash. Meanwhile shares in major portal players that trade publicly on the Nasdaq - Spain's Terra Networks SA (TRRA), New York's StarMedia Networks (STRM) and Argentina's El Sitio (LCTO) - are swapping hands near 52-week lows. These companies have pulled back from the furious acquisition mode they were in just a few months ago, and have trimmed their advertising budgets. As not every dot.com can hope for a strategic investor to happen along and buy them out, venture capital funds and private backers looking for exit strategies are taking on more scrooge-like personas. Many see the jolt of sinking stock valuations and Nasdaq declines as a helpful reduction of clutter. Fly-by-night investors and companies alike stand less of a chance amid tougher market conditions. "We're not giving up on the market. We call it the pause that refreshes," said John Geraci, who oversees more than $138 million in venture capital for Miami-based Meridian Capital Partners. Geraci said that his venture capital group is still "hunting for" vertical Internet portals with a focus on high-growth areas like travel and entertainment. And business plans keep pouring in. -By Amy Guthrie, Dow Jones Newswires; 201.938.2225; amy.guthrie@dowjones.com