No problem, I would like to see the thread get more active with articles an discussion...I checked schwab/briefing.com and 3 brokers gave an INKT estimate of EPS -$0.26 to be reported on 7/16, we'll see...I am long but trying to dig up all info. I can on INKT...
Revenue growth is going to be the key...I am hoping to see revenue of $5.0M this qtr from $3.45 last qtr...
I wanted to repost the below article...INKT could represent an Internet Infrastructure play as opposed to the front of the house portal plays such as YHOO, LCOS, AMZN, etc...
MileHigh
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ANALYST UPDATE: DOWNGRADING INTERNET STOCKS WITH CARE
By Peter D. Henig
Red Herring Online
July 10, 1998
Trying to downgrade Internet stocks is about as easy as rooting for Dallas at a Niner's game. You can do it, but tread with care.
Tell Wall Street about it. This week, analysts are facing the unenviable position of downgrading some of investors' most lovable Internet stocks, like Yahoo (YHOO) and Amazon.com (AMZN), without ticking off the entire online trading community.
On the flip side, Inktomi (INKT), emerging from its post-IPO quiet period picked up a broad range of analyst coverage as Wall Street realizes that the infrastructure of the Internet is itself becoming big time business.
A bull full of angst
"If you think making this decision was easy, think again," said Paul Noglows, analyst with Hambrecht & Quist, of his decision to downgrade Yahoo from a Buy to a Hold.
Mr. Noglows said he finally had to pull the plug on Yahoo based strictly on valuation alone. "I didn't feel people should be buying it at $200 per share," said the analyst, who reiterated his belief, "that on a fundamental basis, Yahoo's story today is stronger than at any point in its limited operating history."
So why did Mr. Noglows suddenly feel compelled to downgrade? "After much agonizing, I came to the conclusion that recent trading in Yahoo's stock has little or nothing to do with the operating fundamentals of Yahoo the company."
It's hard to disagree. In fact, the operating fundamentals which Yahoo recently reported -- earnings of $0.15, a 50 percent increase in registered users, and page views which are now averaging 115 million per day - are still disproportionately out of whack with its $9 billion market capitalization.
Regardless, the analyst agreed that Yahoo's most recent numbers have set a higher level of expectations for search engine stocks across the market.
"I think Yahoo has always set the bar high for other Internet players," said the analyst, "and with earnings this time being so strong, I think they will continue to set that bar even higher."
Don't cry for me Barnes & Noble
Amazon.com's investors also found two recent downgrades a bitter pill to swallow.
Analyst Steve Horan of NationsBank Montgomery Securities reduced the online bookseller from Buy to Hold, while Miles Russ of Wheat First Union reduced it from a Buy to Outperform.
Mr. Russ was diplomatic, yet firm, in declaring that enough was enough for Amazon.com.
"Amazon shares have appreciated 230% since we initiated coverage in January 1998, and tenfold since the IPO in May 1997," said the analyst in a recent report, highlighting the fact that the company's stock has rocketed, Yahoo-style, from the low 40's in June to recent highs at 143.75.
Do investors need any more of a reason than that to take profits? Definitely not. According to Mr. Russ, Amazon is still beefing up its sales, marketing, and advertising expenses to promote its new venture into the music business which will ultimately will have a flattening effect on future earnings.
However, Mr. Russ does call for "continued accumulation of Amazon shares for long term investors with a stomach for volatility." Somebody pass the Maalox.
The search engine's search engine
It didn't take too much searching to spot all of the coverage Inktomi picked up the moment it emerged from its post-IPO quiet period.
All three underwriters for the scalable search-engine and Internet caching company initiated analyst coverage, with a Market Perform rating from Goldman Sachs, and two Buy recommendations from BT Alex Brown and Hambrecht & Quist.
Rakesh Sood, analyst with Goldman Sachs, noted that Inktomi has become the leading provider of Internet search services and network caching applications. As such, he sees Inktomi as a core holding for long-term growth investors.
Mr. Sood also notes what most investors in Inktomi's blockbuster IPO realized early on, that because it sells its search technology for a percentage of total revenues generated through a partner's search page -- like Yahoo's home page -- its success is tied directly to the success of some of the Internet's leading web portals.
Toss in Inktomi's large-scale network caching technology which many industry analysts estimate is two years ahead of the competition and you have a dynamic formula for success, even if the company doesn't have a prayer of breaking even until the first quarter of 2000.
Downgrading comes so naturally
On a final note, Natural Microsystems (NMSS) certainly didn't have a healthy glow to it this past week. Wall Street whacked it with downgrades three separate times, twice from the same analyst.
While BT Alex Brown reduced the company's stock from a Buy to Market Perform -- after Natural Microsystems gave guidance on June 30 that its quarter would be disappointing compared its second quarter a year ago -- investment firm Raymond James was not so merciful.
Analyst Phil Leigh first reduced Natural Micro (a technologies designer for developers of telecommunications solutions) from Buy to Accumulate, and then sliced it again after earnings came out, cutting the stock from Accumulate to Neutral; and with good reason.
The company reported that total revenues for the quarter grew by only 2 percent from $18 million in Q2 1997 to $18.4 million in Q2 1998. Worse yet, earnings per share fell from $0.20 a year ago to only a penny this quarter.
So what did Natural Micro's Chief Executive Officer, Bob Schechter, have to say about his company's poor performance? A lot actually.
"We are very disappointed with our results this quarter and in the first half of 1998," said the chairman and CEO. "These results were impacted by project delays and resultant reduced purchase levels from several customers, shortfalls in Asia, and, to a lesser extent, continued softness in our business in Europe."
In other words, the business is in the toilet. |
