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Technology Stocks : Net Perceptions, Inc. (NETP) -- Ignore unavailable to you. Want to Upgrade?

To: Carl R. who wrote (2658)	8/10/2000 11:15:39 PM
From: rupert1	Read Replies (1) \| Respond to of 2908

Carl: I thought that sentence might provoke a response! I dont think it is as simple as that. After a bubble and a burst, it is not just a question of when and if companies return to the highs they achieved - it is also a question of (a) earnings and (b) rationalisation. In other words - fundamentals. The biotech and internut bubbles are not strictly comparable. Biotech was based on the premise that research would produce profits in a tolerable number of years. But biotech cannot guarantee this. There are too many research variables, a good deal of overlapping and competition. Meanwhile Biotech must consume huge quantities of cash - there is no way around that. Biotech companies tend to get locked into development programmes that cannot be easily altered for two or three years. Those programmes produce no income whatsoever until they produce a saleable product. They may never succeed. Faced with these realities valuations dropped off. But rationalisation - consolidation - takeover and merger activity - was another way that investors could recover "the bulk" of former valuations, in some cases. In the internut sector the market is much more predictable than for biotech. The stocks that will not recover their former valuations quickly or ever are those that had a fundamentally unsound business plan but whose shares were bid up uncritically by investors. The non-viables had a ride on the coat-tails of the viables. Even in the case of some poor business plans which required the burning off of huge cash piles before they could ever reach profitability - the business plan can be amended. Unlike the Biotechs - dot-coms can adapt their strategies. Amazon, for example, could be profitable tomorrow if it decided to cut back on the cash it is spending on brand building or infrastructure or tweaked its business plan to charge more fees. Furthermore, there will surely be substantial merger and acquisition activity among the internuts in the next 12 months - maybe even for NETP. As for CMGI - some of its properties may be seen to be slow earners and this will affect its market valuation. But I would think that CMGI will do the same trick again. It will stir up some enthusiasm for its ability to grow through acquisition. Actually I am not a fan of CMGI and it is interesting that all the COMPAQ holders who were complaining that the market was not according the CPQ share price any value for its large CMGI holdings acquired by selling Alta Vista to CMGI - can now see why. I concede that your remarks were not about NETP - but to make the point - NETP was never overvalued like the Biotechs or the Internuts - it does not have the weaknesses of some of the internuts - in fact it is not even an internut stock. However, its products and customer list and cash may be of interest to some internuts and in that sense is vulnerable to being bought out by them unless its share price can recover.