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Technology Stocks : K-Tel (KTEL) Have the cheesy '70s records come to an end? -- Ignore unavailable to you. Want to Upgrade?

To: D.J.Smyth who wrote (1719)	5/6/1998 9:45:00 AM
From: Katherine Derbyshire	Respond to of 3203

>>Katherine, don't you think it is possible that Ktel could generate $95 million from internet record sales? Such a pig flying act would double their revenue from current levels.<< Well, no I don't, but even if they did it wouldn't justify a $100/share valuation. They are tied to a $10 million line of credit that, among other things, restricts their ability to acquire rights to more music. Their 1997 net income dropped 41% because of a legal dispute over royalties, which suggests that more legal trouble may be looming. Their own SEC filings note their reliance on open-ended borrowings from the CEO's other companies in order to maintain liquidity. And, before the hype kicked in, the market valued their current revenue levels at about $7 per pre-split share. >>Why won't people purchase tapes from the internet vs. the store where sales cleared $29 bill worldwide? << I'm sure they will. Which is why everyone and his brother is selling music on the Internet. Including companies that have well-established retail channels, well-established brand images, and the liquidity to ride out the inevitable consolidation. >>And why not ktel with the billboard agreement?<< Because the Internet generation grew up laughing at K-Tel's re-recorded compilations, and wouldn't dream of even looking at their site for worthwhile music. Even if they now have a legitimate product, which I doubt, their negative brand image is going to kill them. I'm not down on Internet companies. I work for one. (We haven't IPOd yet. Is it too early to start hyping the shares?) But slick web sites and enthusiastic press releases don't put earnings in the pockets of shareholders. IMO, the whole K-Tel frenzy is just an extreme case of the irrational exuberance that's gripped the entire sector. (For what it's worth, I wouldn't pay $100/share for Yahoo, either.) Katherine

To: D.J.Smyth who wrote (1719)	5/6/1998 2:36:00 PM
From: Steven Hsu	Read Replies (1) \| Respond to of 3203

I'm a fairly regular customer of Amazon.com but have yet to buy a CD on the Internet. For some reason I don't mind waiting a few days for books to be delivered, but I want to be able to pop the CD in player ASAP. Also, I find that Amazon.com gives me a great selection and is easier to search than a non-virtual store. OTOH, the music sites I've visited seem to cater to mainstream music trends and don't have any selection of harder-to-find CDs that a good non-virtual CD store would. I would need a compelling reason to purchase music off the Internet, better pricing or better selection, which just aren't there yet.