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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end? -- Ignore unavailable to you. Want to Upgrade?

To: Mad2 who wrote (3386)	3/11/2001 5:49:54 PM
From: RockyBalboa	Respond to of 3543

Back2debusiness: 'B2B' drags Internet stocks down Yahoo settles at $17 on anniversary of sector's high By Bambi Francisco, CBS.MarketWatch.com Last Update: 5:29 PM ET Mar 9, 2001 NEW YORK (CBS.MW) -- Unhappy anniversary! Net shares were pummeled Friday, one year to the day after the sector hit its all-time high. Slapped with earnings warning after warning, investors fled the battered group amid perpetual concerns that valuations, particularly in the so-called business-to-business category, have yet to come down sufficiently to fully reflect a severe global economic slowdown. The Goldman Sachs Internet Index declined 6 percent by the close. After enduring several choppy sessions, the GIN closed out the week with that same percentage loss. Year-ago comparison It was on March 9, 2000, that the Net index hit its high-water mark of 784.94. Twelve harrowing months later, the Net barometer is down 82-plus percent from that level. Merrill Lynch Internet Holdrs fell 5 percent Friday. Meanwhile, the Nasdaq slid 115 points to hover precariously near the 2,000 mark, falling to an intraday low of 2,041.78. A warning from chip giant Intel and a strong jobs report ignited the selling. Yahoo (YHOO: news, msgs, alerts) continued to migrate to lower floors, falling 4 percent to $17. Shares had fallen to a low of $16.06 intraday. EBay (EBAY: news, msgs, alerts) lost $5.13, or 13 percent, to $34. Inktomi (INKT: news, msgs, alerts) and Exodus (EXDS: news, msgs, alerts) lost 12 percent each, both on solid volume. But it was the business-to-business group, a segment some believe is still too rich, that came down hardest Friday. Merrill Lynch B2B Holdrs gave up 7 percent by the close but had fallen as much as 11 percent earlier. When does 'B2B' shoe drop? "If General Electric, Wal-Mart and Motorola show a protracted slowdown in the April and May timeframe, then spending for e-procurement and supply chain will come down," said James Breyer, managing partner at venture firm Accel Partners. This will affect share prices of Ariba (ARBA: news, msgs, alerts) , Commerce One (CMRC: news, msgs, alerts) and I2 Technologies (ITWO: news, msgs, alerts) . Those three companies have yet to warn, according to Mark Verbeck, an analyst at Epoch Partners, who's concerned only at the margin that these B2B players will lose business at the end of the quarter, much like Oracle (ORCL: news, msgs, alerts) and Tibco Software (TIBX: news, msgs, alerts) . Both Oracle and Tibco warned of shortfalls due to canceled orders in the final days of their quarters. Shares of Ariba fell 16 percent to $11.50; Commerce One tumbled 19 percent to $11; I2 Technologies slid 9 percent after it announced its plan to buy software vendor Rightworks for $114 million in stock. Concerns that a U.S. slowdown will spill over to Europe had investors running from that group, especially Commerce One, which generates half its revenue from Europe and Asia. Not in Kansas anymore The sour market conditions gave investors few reasons to consider a new IPO on the block, regardless of its pedigree. Net infrastructure firm Loudcloud (LDCL: news, msgs, alerts) , best known as the latest effort of high-profile founder Marc Andreessen, priced 25 million shares at $6 late Thursday, to raise a total of $150 million. As recently as Feb. 20, Loudcloud had sought to raise $200 million. The stock closed its first day at $6.16. See IPO Report. Recall, Andreessen's Netscape IPO back in August 1995 rocketed 108 percent on its debut day. Goldman Sachs and Morgan Stanley priced the deal. Portal in a storm Yahoo, at sub-$10 billion levels, has investors perplexed as they balance opportunity with current realities. Yahoo is, after all, one of the leading online brands, with a global footprint attracting 185 million people per month. When advertising picks up, Yahoo is positioned well to garner the lion's share. Thomas Weisel Partners analyst Gordon Hodge is advising his clients to consider Yahoo shares now. But it's still unclear when advertising will stabilize and begin to pick up. Yahoo executives have told Wall Street that the back half of '01 is extremely difficult to assess. Accordingly, Yahoo has not told Wall Street what it can generate this year but emphasized its goal to break even, at the very least. Trying to assess the few tea leaves thrown their way, most analysts now expect Yahoo's annual revenue to fall roughly 33 percent to $810 million, down from the consensus estimate of $1.2 billion. Given that dire outlook for the online ad market's biggest benefactor, the overall market is now expected to fall this year. Most analysts have very little insight as to where online advertising will go in '02. Moreover, Yahoo's CEO chair is awaiting a new occupant, meaning Yahoo has a chance to redefine itself as a media and publishing company or a technology company, depending on whom it taps. See Jon Friedman's Media Web. What's more, it's unclear whether Yahoo can generate meaningful subscription revenue by charging monthly fees to its huge audience base. Amazon.com had surged 23 percent on reports earlier this week suggesting that the e-tailer could be dreaming of a new name: Wal-Mazon. See All Aboard. B2B watch After such a deal had been rumored for some time, I2 Technologies purchased Rightworks, a provider of software to procure direct and indirect materials and majority-owned by Internet Capital Group (ICGE: news, msgs, alerts) , for $114 million in stock. It's a fire-sale price, said CS First Boston analyst Brent Thill. According to AMR Research, Rightworks had $36 million in revenue last year. The Rightworks technology will be integrated into I2's supplier relationship management offerings. It will enhance the sourcing and collaborative procurement functionality of I2's TradeMatrix, Thill said. See Part I: Evolution of 'B2B.' Memorable March So far in March, the Goldman Net Index is down 8 percent. That's not so bad following February, when the GIN slid 32 percent, mostly due to a harrowing two-week sell-off at the start of the month. That big reversal of fortune followed a surprisingly solid January in which the GIN rose 23.5 percent. Quote of the week "It's unfortunate that Yahoo timed its worst earnings release with the departure of Tim Koogle," said Accel Partners' Breyer. "Koogle built up the firm to a $9 billion company. Why did he have to step down on that note?"

To: Mad2 who wrote (3386)	3/13/2001 5:50:58 AM
From: RockyBalboa	Read Replies (3) \| Respond to of 3543

Forbes.com Confusing Low Price With Value By David Simons Here's a sign that the bear market in Net stocks isn't over: Bulletin board busybodies and investment commentators who should know better are still chatting up the most beaten down dot-com shares as possible ``value plays.'' They were doing the same thing last May, two months after the Net stock rout began. At the time, we looked at a sample of 15 net stocks trading below $5. They were down an average 88% from their all-time highs. Having lost so much, it seemed they couldn't loose much more. They did. Today those same stocks are down an average 76% from their May prices. (See table.) The best performer was CDNow. It was acquired in August by the privately held publishing giant Bertelsmann for $3 cash per share --a 9% loss versus the May 23 pricing date of our sample. The other acquisition, American Greetings' (NYSE: AM - news) buyout of E-Greetings (Nasdaq: EGRT - news), was done at 68% less than the May price of E-Greetings stock. Worse, four of the 15 companies in the May sample went into liquidations that, on average, have returned to shareholders 80% less than the stock price in May. Undaunted, the dot-com-dumpster rummagers continue to screen for ``undervalued'' situations. The focus is on stocks that trade near or below the amount of the companies' cash holdings per share. Those screens often have two serious flaws. Stale cash data: A widely disseminated study created with price data from Feb. 2, listed 18 stocks trading below $2 that were down at least 90% from their all-time highs and trading ``below or near cash.'' Not only were the prices incorrect, the cash figures were as of the end of September. All but one of the companies hadn't yet reported year-end financials. That's a real problem when the companies are burning up to 30% of their cash each quarter. For example, at its Feb. 2 closing price of $1.16, free Internet service provider NetZero (Nasdaq: NZRO - news) was valued 34% less than the $1.75 per share of the company's $220 million cash as of the end of September. But by the end of December, as reported by the company on Feb. 7, cash was down to $181.8 million. That's 69 cents per share, meaning that the stock's $1.16 price on Feb. 2 was, in fact, a 68% premium to NetZero's cash per share. Similarly, the $1.53 Feb. 2 closing price of business-to-business portal outfit Viador (Nasdaq: VIAD - news) was just 22% greater than the company's $1.25 per share of cash as of Sept. 30. But fourth-quarter financials announced Jan. 30 reported cash down 29% to $16 million from $22.6 million in the third quarter. That made the Feb. 2 stock price a hefty 74% premium to cash. The screen miesters may have thought they were discovering nuggets missed by the market. In fact, the market was smarter. It had already adjusted prices in anticipation of the cash burn. The other flaw of the studies is focus on cash alone. As a measure of value, cash is limited by debts. ``Burn rate,'' which has become popular among investors, isn't always the best yardstick of that. More useful is ``working capital.'' That is a company's current assets, such as cash and accounts receivable, minus current liabilities, such as accounts payable and total borrowings due within a year. Working capital essentially reflects the total financial resources that a company has available to conduct and grow the business without disruption. Cash burn alone can overstate that ability. For example, while Viador burned 29% of its cash during the fourth quarter, leaving $16 million in the bank, working capital plummeted 65% to $6.4 million. Recognition of that perilous state may explain why, despite the company's announcement of cost-cutting measures, the stock on Feb. 13 fetched 97 cents--one-third less than it did on Feb. 2 when some considered it a value candidate. Yet to read the comments of the Net stock screeners, what follows the ``cash'' line on the balance sheet is just an obscure appendage to the income statement. In July, a well-known curator of Net stock cash-burn data touted selling-for-less-than-cash stocks from a ``value screen'' done with March quarter cash figures and June 30 prices. The picks have since lost 53% on average, without a single winner among them. If you become tempted by lists of low-priced Net stock ``value plays,'' you'll be better off throwing dollar bills into the kitchen disposal until the urge passes.