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

To: Spider Valdez who wrote (20954)	10/9/1998 8:07:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

Cautious? Yes. Frightened? No Analysts talk Net stocks and market woes By Emily Church, CBS MarketWatch Last Update: 3:20 PM ET Oct 8, 1998 NewsWatch NEW YORK (CBS.MW) -- Now's the time to be very cautious in picking Internet stocks, a panel of four top Internet financial analysts agreed Thursday. It's certainly not an easy time to face a packed room of Net-sector investors wondering what's whacked some 30 percent off the values of their stocks since the market rout began this summer. Internet stocks on Thursday, as tracked by the Amex Index of Internet Stocks ($IIX), dropped 7.5 percent by midafternoon. "It's gotten a little tighter recently, and I think it's going to get tighter," said Merrill Lynch's Jonathan Cohen, calling out Internet book and music retailer Amazon.com (AMZN) as a stock that's "trading at an enormous premium to the others." Cohen said he's advising clients to use "a high degree of specificity and a high degree of discretion" if they're investing in Net stocks in this environment. As high-flying valuations of Internet stocks are coming back to earth, investors can expect to see losses and a bifurcation between the "blue chip" Net companies and a bevy of smaller competitors, the panelists agreed, speaking at the Internet World trade show in New York. Investors need to determine which companies "are going to take advantage of the Net and which ones are not," said Dan Rimer of Hambrecht & Quist. Liquidity question Beyond the valuation correction, one factor dragging Net stocks as a group down farther and faster than the overall market is the liquidity issue, noted Marc Usem of Salomon Smith Barney. All told, the Net stocks have attracted a total market capitalization of some $70 billion, which is peanuts relative to other sectors, and that's partly behind some of the dramatic drops. "These stocks have a huge, huge media presence" he said. "Yet how liquid are they? Small amounts of trading in these stocks are making a larger move." No credit crunch visible The gloom surrounding Net stocks signals, at least to Jamie Kiggen of Donaldson, Lufkin & Jenrette, that the market's nearing a bottom. Kiggen, the self-described "lone optimist" of the day, said Yahoo!'s (YHOO) wretched performance on Thursday -- it dropped 14 3/8 to 100 in early trading after besting analysts' estimates with its third-quarter earnings -- is an indication of the breadth of negative sentiment. (See full story.) Yahoo!, whose stock was back to 105 by midafternoon, delivered "a perfect quarter," he said. "No one wants to hear about 'buy' ratings on [Internet] stocks in this environment, but we're not in 1987 this time around." The most interesting action in the Net world is coming from small, private companies, which are not facing uniform difficulty in finding capital to fuel growth, Merrill's Cohen said. "The IPO market is not closed down for business right now," he said. The market, Cohen conceded, has become "more difficult and more selective." Yet, he said, he still expects to see "a lot [of deals] in the next 12 months." Hambrecht & Quist's Rimer said he's expecting the climate to prompt the Net's more established players to court the niche players and for others to mull a union along the lines of that being pursued by music retailers N2K and CDnow. "There's a big opportunity to buy, merge, do something to piggyback on the growth of private companies," he said.