Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: igor who wrote (3415)	4/26/1998 12:54:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Internet stocks put on spectacular high-wire act Reuters Story - April 26, 1998 12:32 %BUS %ENT YHOO XCIT SEEK AMZN NCSP KTEL V%REUTER P%RTR By Andrea Orr PALO ALTO, Calif., April 26 (Reuters) - It used to be a good rule of thumb for investing: buy low and sell high. Anyone who has watched Internet stocks go from high to sky high to off-the-charts high knows the real rules can be a little different. Stocks of several Internet directories like Yahoo Inc. , Excite Inc. and Infoseek Corp. have for months outdone the most aggressive projections, and even after some sizable drops last week they remain overpriced by conventional measures. "Do I understand the valuations for these companies? Aboslutely not." said said Bill Schaff, chief investment officer at Bay Isle Financial in San Francisco. "But, do I own a couple of these stocks? Yes I do." The models analysts and financial advisors usually use to judge a company's worth just do not apply when it comes to Internet stocks. Many of the most popular stocks are in companies like online bookseller Amazon.com Inc that are not yet making a profit. And for companies like Yahoo that are making some money, the real appeal is not the bottom line number, but other figures on "unique users" and "page views" that measure traffic to its site and offer a glimpse of how rapidly they are growing. Yahoo, the most popular Internet directory, averaged some 95 million page views per day in March, up from 65 million last December. Schaff explains the popularity of these stocks as rooted in a "faith that sometime out in the future they will become huge businesses." Faith is one thing when a stock is cheap and the future looks bright. But in the wildly over-valued Internet sector, there are signs some investors are starting to look for more. For one thing, there is concern that even if all the most optimistic projections for Internet use prove true, not every company providing an online service will reap the rewards. This became a nearer-term fear last week amid talk that Netscape, the popular Internet browser, may drop deals to carry links to other Internet directories. Netscape Communication Corp's Web site currently contains links to Yahoo, Excite, Lycos, Infoseek and other search sites, in effect diverting millions of users to competitive sites. The company is now renegotiating those deals, which expire in June. For a company like Yahoo, which gets less than 10 percent of its audience from the Netscape link, the deal is probably not critical. But for others, like Infoseek, which depends on Netscape for more than 25 percent of its audience, it could be. In an interview late last week, Infoseek Chief Financial Officer Les Wright said he was confident a deal would be renegotiated with Netscape, although not necessarily on the same terms as the current deal. Netscape would not comment on whether it would drop any of the existing marketing deals but it did say it was focused on beefing up its own Web site, Netcenter, in an effort to keep more Internet traffic for itself. There were also new warnings last week that some of the latest companies to adopt an online business model, may have come to the game too late, or with too little expertise. Stocks of several companies announcing plans to take their business online rose sharply last week, but then quickly lost ground as investors took a closer look. Music retailer K-tel International Inc , for example, moved as high as $49.50 from just $6.94 the week before, after it announced plans to sell its CDs online. But by the end of the week, K-tel shares had retreated to $26.75. "As Internet stocks move from red hot to white hot, investors are looking for those stocks that have not yet moved up in sympathy," said Philip Leigh, an analyst with Raymond James & Associates in St. Petersburg, Fla. "A by-product of this has been that those stocks that don't have the merit to be included with the others are getting included." "You would think that the big book store chains would be able to outsell Amazon.com online, but they're not," added Leigh. "Success in a conventional market does not guarantee success on the Internet." Source and during what time frame?