To: NucTrader who wrote (3427 ) 9/25/1998 9:29:00 PM From: SJS Read Replies (1) | Respond to
From the joke/serious dept, a possible short?Excuse us, but isn't this bus going the wrong way? Just more evidence that with Internet stocks, valuation measures mean next to nothing right now . The web hosting business is essentially renting out web servers and maintaining them for others. EXDS did $12 million in business last year, and Juarez projects $50 million this year. Business is growing at a good clip, but this is the type of business where margins will eventually get squeezed. People pay whatever it costs for Internet hosting now, but someday Internet hosting will be like renting office space: readily available, widespread, and competitive. In fact, as corporate IT departments get more and more Internet savvy over time, it seems reasonable to expect many corporations to pull their externally hosted sites inhouse. We might like the business, if it was profitable, as it has a great growth rate. But with analysts projecting just larger losses as time goes on, what's the point? EXDS loses almost $5 million a month, and has only $60 million in cash. With this type of burn rate, and profitability nowhere in sight, another stock offering is definitely coming, diluting current owners. Robertson becomes only the fourth analyst following the company; maybe they can all split the next offering. Our only deduction from the recent sharp rise in the stock is that it clearly trades primarily on emotions, which have a nasty way of drying up without warning. If that happens, Exodus holders may feel more like the Egyptian soldiers than Moses.
