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Technology Stocks : Amazon.com, Inc. (AMZN) -- Ignore unavailable to you. Want to Upgrade?

To: Skeeter Bug who wrote (119846)	3/9/2001 11:48:06 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

Sb,I now get how the likes of Blodget and Meeker keep their jobs! >NEW YORK, March 9 (Reuters) - A year ago companies were rushing to add dot-com to their names and spending millions to plug their Web initiatives. Now they are in a frenzy to let investors know they are focusing on efforts beyond the Web and many are dropping the dot-com from their names. Many Internet media stocks have found themselves in the unwanted dot-com heap, with their share prices down about 90 percent from year-ago levels, as the market approaches the one-year anniversary of the beginning of the Nasdaq meltdown. Even Internet media giant Yahoo Inc. (NASDAQ:YHOO) has seen its market value sink about 90 percent, and on Wednesday warned that its 2001 earnings would fall well below already lowered estimates. The gloom has spread all over the Internet sector, where conferences, once flush with attendees and freebies, have been canceled. Lavish Internet launch parties have been replaced by pink-slip gatherings. "What we are seeing (now) is a brutal reversion to reality," said Merrill Lynch Internet analyst Henry Blodget, who quickly became one of the personalities attached to the dot-com climb after setting a $400 price target on Amazon.com stock. After hitting that target briefly, the stock split for second time in 1999 and Amazon is now trading at $11-5/8. Easy funding for Internet start-ups contributed to the high valuations enjoyed by dot-coms in the last couple years, but the sector got overcapitalized and expectations got ahead of reality, Blodget said. The celebrated market pundits whose every word investors hung on are now becoming punching bags as investors look for someone to blame for the nearly 70 percent drop in the American Stock Exchange Internet Index and the drop in the Nasdaq Composite Index, which sits at about 2,100 -- down about 58 percent from its record close of nearly 5,050 a year-ago. Among once-hot IPOs, eToys has filed for Chapter 11 bankruptcy protection and had its shares delisted earlier this year; a panel panel is also discussing the possible delisting of Internet health information provider drkoop.com Inc. (NASDAQ:KOOP), which went public at $9 and saw its shares rise more than 80 percent on the first day of trade. Even Internet bellwether Yahoo's shares have almost sunk back to the level it went public at in April 1996 at $13 after climbing to $250 in January 2000. "This year is going to be tough," Blodget said. "The job now is to survive." These days survival means cutting jobs and expenses and focusing on businesses that will lead the company to profitability as soon as possible. In many instances, this means focusing on non-Web initiatives. TheStreet.com (NASDAQ:TSCM) co-founder Jim Cramer and iVillage Inc. (NASDAQ:IVIL) Chief Executive Doug McCormick both recently said their companies were channeling their energies into non-Web efforts now in an attempt to expand their brands beyond the Internet. Online retailer Kozmo, which promises to deliver everything from ice cream to music to your door in an hour in major cities, was one of the most recent Internet companies to drop the dot-com suffix from its name. OUTLOOK REVEALS FEW SIGNS OF OPTIMISM Even with consolidation in the industry and the shaking out of many weak players, many analysts and fund managers do not expect companies that are not among the dominant Internet leaders such as AOL Time Warner Inc. (NYSE:AOL), Yahoo, Amazon.com (NASDAQ:AMZN), eBay Inc. (NASDAQ:EBAY) and DoubleClick Inc. (NASDAQ:DCLK) to get back above their initial public offering levels anytime soon. The most bullish Internet analysts have taken a much more cautious tone. Morgan Stanley Dean Witter's Mary Meeker, one of the Internet's biggest bulls and leading analyst at the firm that brought a large majority of dot-coms public during the Internet heyday, said in a recent research report that this may be a long winter for the sector. "Hopes for a second-half recovery may not be what they were not so long ago," Meeker said in the note. "When will we have catalysts that boost the stocks of the companies that execute? These catalysts don't appear to be on the near-term horizon." She said, however, that never in the history of business had a handful of companies grown their users, uses and usages so quickly and been able to build brands so quickly. Some managers of technology funds are sitting on or building positions in companies that they believe are best prepared for the market turn. Paul Cook, a portfolio manager at the Munder Net Net Fund which has $3 billion under management has pared back the companies in the fund to about 70 from 120. The company's dot-com exposure has fallen from a high of 35 percent to about 10 percent to 12 percent, he added. "The two areas we've focused on from a technology point of view is storage and security. The economic climate has changed to one of fear, and IT (information technology) spending has come in significantly so spending only on non-discretionary. Storage seems to be one of those and security appears to be another one," Cook said. The silver lining the companies that are still at battle are clutching to is that when they come out of this market shakeout, they will have many fewer rivals and a lot better market position. "It's the end of the beginning. Most new industries start this way and then you see new companies join the ranks (of the survivors)," Blodget said. Before investors give the second-tier Internet names another look they will look for a rebound in the Nasdaq first. "You need the Yahoos, eBays, AOLs and DoubleClicks and some of those others that are profitable to move up and then investors will look to the secondary names or companies that have gone public recently," said Alan Lowenstein, portfolio manager at the John Hancock Technology Fund.