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To: Satellite Mike who wrote (8891)	7/5/1998 3:10:00 PM
From: Glenn D. Rudolph	Respond to of 164684

From Merrill Lynch: Comments on Recent Internet Rally - 2 July 1998 2 Internet Stocks Continue To Rally The recent and dramatic increases in Internet company share price values seem to deserve some comment. While it is difficult not to be swept up in the euphoria of daily gains that would represent strong annual performance for most other investments, we would now urge both caution and discernment with regard to Internet investment. We believe that this may be an opportune time for investors to re-evaluate the composition of their Internet exposure and to focus on the highest-quality names which have some realistic basis for their public market values. We remain enthusiastic about both the operating prospects and the share prices of the three companies on which we maintain intermediate term buy or accumulate ratings (America Online (AOL; $110 ‘; D-1-1-9), Lycos (LCOS; $82; D-2-1-9) and N2K (NTKI; $19 5/8; D-2-1-9)). We note that we raised our share price objective this morning from $75 to $95 per share for Lycos. We are also encouraged about the prospects for several smaller Internet companies which may have been somewhat overlooked thus far (our work on some of those companies is in process). While we remain extremely enthusiastic about the prospects for the continued growth of the Internet, and while we continue to recommend selective participation, we expect that only a limited portion of the universe of public Internet companies will perform to a standard necessary to justifiy their market capitalization. [AOL, LCOS] MLPF&S was a manager of the most recent public offering of securities of this company within the last three years. [NTKI] The securities of the company are not listed but trade over-the-counter in the United States. In the US, retail sales and/or distribution of this report may be made only in states where these securities are exempt from registration or have been qualified for sale. MLPF&S or its affiliates usually make a market in the securities of this company. Opinion Key [X-a-b-c]: Investment Risk Rating(X): A - Low, B - Average, C - Above Average, D - High. Appreciation Potential Rating (a: Int. Term - 0-12 mo.; b: Long Term - >1 yr.): 1 - Buy, 2 - Accumulate, 3 - Neutral, 4 -Reduce, 5 - Sell, 6 - No Rating. Income Rating(c): 7 - Same/Higher, 8 - Same/Lower, 9 - No Cash Dividend. Copyright 1998 Merrill Lynch, Pierce, Fenner & Smith Incorporated (MLPF&S). This report has been issued and approved for publication in the United Kingdom by Merrill Lynch, Pierce, Fenner & Smith Limited, which is regulated by SFA, and has been considered and issued in Australia by Merrill Lynch Equities (Australia) Limited (ACN 006 276 795), a licensed securities dealer under the Australian Corporations Law. The information herein was obtained from various sources; we do not guarantee its accuracy or completeness. Additional information available. Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities ("related investments"). MLPF&S and its affiliates may trade for their own accounts as odd-lot dealer, market maker, block positioner, specialist and/or arbitrageur in any securities of this issuer(s) or in related investments, and may be on the opposite side of public orders. MLPF&S, its affiliates, directors, officers, employees and employee benefit programs may have a long or short position in any securities of this issuer(s) or in related investments. MLPF&S or its affiliates may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any entity mentioned in this report. This research report is prepared for general circulation and is circulated for general information only. It does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security's price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk.