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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: jjkirk who wrote (19059)	11/23/2000 2:18:27 AM
From: Boplicity	Read Replies (2) \| Respond to of 65232

We need a breakthru, or stories like the below one will be of the norm. <<Inktomi Falls 22% on Concern About Growth Prospects Foster City, California, Nov. 22 (Bloomberg) -- Inktomi Corp. shares fell 22 percent, the biggest one-day loss in 19 months, after a rival's results fell short of expectations. The shares of Inktomi, whose software helps speed delivery on information over the Internet, fell $7.88 to $28.38 in trading of 13.5 million, more than four times the three-month average. Earlier they fell to $27.25, their lowest price since February 1999. Inktomi officials couldn't be reached for comment. The stock has fallen more than 85 percent since March, when it hit a record $241.50, as investors have grown increasingly skeptical about the outlook for technology stocks. Even after today's decline, Inktomi is valued higher than more established technology stocks. At today's close of trading, Inktomi was priced at about 98 times the 29-cent fiscal-year average earnings estimate of analysts polled by First Call/Thomson Financial. Oracle Corp., the world's No. 2 software maker, closed at about 45 times forecast earnings per share, while Cisco Systems Inc. was at about 64 times expected profit. ``For a while, fundamentals didn't matter,'' and investors bought shares in high-fliers like Inktomi without paying much consideration to their future earnings potential, said Brian Eisenbarth, fund manager with Collins & Co.'s Golden Gate Fund. ``The market is starting to focus on fundamentals again.'' The drop in Inktomi shares was precipitated by results from Inktomi competitor CacheFlow Inc., which yesterday reported fiscal second-quarter revenue that fell short of expectations. Investor Sentiment Investors are worried that the disappointing results released late yesterday by CacheFlow could signal potential problems with sales of Inktomi's Traffic Server software that helps speed, monitor and manage delivery of Internet content. Rather than wait to see if there's anything to the speculation that Inktomi's business is in trouble, investors would prefer to sell the stock and put their money into investments they perceive to be less risky, analysts said. ``The market is just going through a complete revaluation. Fundamentally nothing has really changed at Inktomi,'' said Robert Fagin, a Bear, Stearns & Co. analyst with a ``buy'' recommendation on Inktomi. Fagin said he's advising clients to buy Inktomi, though the stock may not recover until investor sentiment toward technology stocks improves. Eisenbarth said that he is betting on more established high- tech companies such as computer maker Sun Microsystems Inc., Oracle and Cisco. ``These companies have been in business long enough that their business models have had a chance to prove themselves to be legitimate,'' he said. Foster City, California-based Inktomi first sold shares to the public in June 1998 at a split-adjusted price of $4.50. They doubled in their trading debut as the company benefited from the then-widespread investor enthusiasm about the prospects of Internet companies. CacheFlow Results CacheFlow shares tumbled 51 percent after the maker of devices to accelerate Web data retrieval said fiscal second- quarter sales rose 45 percent to $32.5 million in the quarter ended Oct. 31 from the three months ended in July. That was less than some analysts had expected, said Wedbush Morgan Securities analyst Adam Holiber. ``The market was looking for 55 percent growth,'' said Holiber. ``People expected them to get to Jupiter and they only got to Mars.'' CacheFlow spokeswoman Ann Candelario said the company had been forecasting that revenue growth would be between 30 percent and 40 percent. Still, ``some out-of-control whispers'' had raised expectations beyond that level, she said. >> Greg---Why have the allowed the promise to become narrow? WHY? I can't understand WHY they had to kill it so FAST.