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To: $Mogul who wrote (802)	7/26/2001 9:26:56 PM
From: Ryan Bartholomew	Read Replies (2) \| Respond to of 977

Most ratios are useful only when comparing similar companies in mature markets. Internet search/portal companies such as YHOO, GOTO, and FWHT are not only different in scope, but their business models have not nearly reached maturity. FWHT is probably the best example of the three for me to use to demonstrate this. Their revenues are growing at triple-digit rates - not a sign of a company anywhere near maturity. Now look at their PE. If they earn .01 for 2001 and are priced at $2 per share, their PE would be 200. Extremely high by most standards. However, if they earn .20 for the year (which is easily attainable given the trend they are experiencing) their PE would be 10. Extremely low by most standards. Comparing Coca-Cola and Pepsi-Cola's PEs makes sense - similar companies in mature markets. When one of these companies has an earnings swing of .19 it makes a difference in the ratios, but not an overwhelming difference. But applying this metric to a company like FWHT is irrelevant and absurd because a .19 swing for them would make them seem either insanely overvalued or insanely undervalued if their PE is given credibility as an indicator. You also mentioned that "most of the core net companies are still unprofitable or nearly so". Just because "most" are suffering does not mean that "all" must have the same fate. Bear in mind that almost every company loses money from the start. As the market matures, winners emerge and you need to look at them on a case by case basis. Amazon has lost money for years and is not showing many signs of turning around. Does this mean that ALL e-commerce companies are destined to fail? Of course not. I happen to own a small one that has done quite well, and there are many others (albeit most are much smaller than Amazon) out there that are in the black. This applies to the search/portal companies too. YHOO is about breakeven, GOTO is forecast to be profitable for the rest of the year, and FWHT is already profitable and is in the middle of rapid revenue growth. You don't really believe that just because many portals such as Excite and Alta Vista are losing money fast means that the aforementioned profitable ones must be doomed as well, do you? PS> Donny, brk, and the other GOTO/FWHT naysayers. How are those short positions treating you? Keep replying on superstition, charts, trends, and luck and you will lose a lot of money. With time you will learn that earnings are what matter in the long run. Invest in companies with good business models that turn profits and you will succeed. You own stock to share in the earnings, so the prices reflect the present value of all future cash flows. Sure - psychology, hype, and trends play a role on a short-term basis, but you can only fight reality for so long before you take a major bath. You can hope and pray all you want for a stock to drop, but when it turns profitable and becomes more and profitable you aren't likely to get your wish.