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

To: Glenn D. Rudolph who wrote (21037)	10/9/1998 9:26:00 PM
From: Spider Valdez	Read Replies (1) \| Respond to of 164684

that is funny! i think if those areas have internet access and consumers have credit cards then they are potential customers! of course if they access internet from public facility and have no disposable income you make good point! spider

To: Glenn D. Rudolph who wrote (21037)	10/11/1998 2:39:00 PM
From: Glenn D. Rudolph	Respond to of 164684

STREET WISE by Sam Jaffe ARE INTERNET STOCKS STARTING TO MAKE SENSE? The past few days have been difficult enough for investors in blue-chip companies, with triple-digit drops in the Dow Jones industrial average becoming commonplace. But this bronco-like market has been even rougher on investors in Internet stocks. They've been whipsawed repeatedly as the market tried to make sense of the world economy. And in the past two days there has been a stomach-churning plummet in the values of these stocks -- enough to knock many high-tech entrepreneurs off their pedestals. The market value of industry leader America Online (AOL) has dropped by 17.1% since the market's close on Oct. 5. The bellwether of the sector, Yahoo (YHOO) has lost 16.7% -- despite reporting surprisingly strong earnings on Oct. 7. The leading Web retailer, Amazon.com (AMZN), is down 41% from its all-time high of $147 in July. One person sees beauty amidst the carnage, however. Keith Benjamin of BancBoston Robertson Stephens is one of the leading analysts of Internet stocks and has often been a voice of reason when it seemed the sector could do no wrong. Now, Benjamin says that what might be more important than the correction in these stocks, which everyone expected someday, is that for the first time they seem to be moving with the market. Until now, Internet shares were the Superman of the market. They seemed to have reserves of power that would keep them going well after every other sector had tired. And they were disease-resistant. Liquidity crunches, Asian flus, and seasonal downturns didn't affect them even as the rest of the market was hacking and wheezing. Net stocks are no more resistant to the current downturn than any other others, however. "The Internet stocks are now links to the market," says Benjamin. "You just can't fight a really bad bear market." In an odd way, that's probably good news, especially for investors who didn't get a chance to buy Yahoo at $24 last year. Good news? How can that be after such a slaughter? For one thing, it's more of a trimming of fat than a slaughter. The downturn brings Internet stocks into a more realistic price range. Yahoo, for instance, dropped in two days from a price-to-earnings ratio of more than 3000 to 174. Moreover, Benjamin points out, as soon as the overall market recovers, those Net companies that are still standing will be some of the first stocks investors come running back to. "When things begin to look healthier, everyone will be looking for companies with proven growth. The best place to find that is on the Internet," says Benjamin. That could be especially true if the economy hits a recession, which will surely dampen -- but almost certainly not stop -- the growth in Internet usage. So now that the Net stocks are meeting their moment of truth, here's how Benjamin suggests sizing up companies. Market leaders are probably safe to invest in. Companies below the top tier in market share are going to have a much more difficult time. "The one clear thing that came out of Yahoo's earnings announcement was that there's a very rich prize for being in first place," says Benjamin. "And the winners are stretching out the distance between them and everyone else." Indeed, despite the downturn in its stock price, Yahoo's earnings gave Internet true believers much to cheer about. The company's revenue tripled from $18 million in the same quarter of 1997 to $53 million. In addition, Yahoo announced earnings per share of 15 cents, compared with 1 cent for the quarter a year ago and better than analysts' expectations of 9 cents. But Benjamin is still wary about Yahoo's stock price, which is inflated because of the company's market-leading stature. He points out that Yahoo must maintain its stratospheric growth in order to maintain its lofty multiple. Benjamin is much more keen on another industry leader, America Online. That company is expected to earn $1.05 per share in 1999, which gives it a forward p-e of 81. That's still high. But it isn't unprecedented for companies that maintain strong growth rates to garner such a multiple, even in a recession. Be wary of those companies that haven't yet developed a market-leading brand name, Benjamin says. He reads the recent merger of music retailers CDNow (CDNW) and N2K (NTKI) as a sign of desperation as they struggle to compete with Amazon -- and not as a visionary merger. Companies that can't brag about being No. 1 in whatever they do will have a much more difficult time getting additional capital from Wall Street, he feels. There are always exceptions, of course. E*Trade (EGRP) currently has a market capitalization of $660 million -- not much more than the amount of cash the company is hoarding. Although it is in the unenviable position of being both a financial-services company and an Internet company, two sectors undergoing wrenching corrections, its stock is screaming "Buy!" At least, that's what it could sound like to anyone who's not too scared to listen. Sam Jaffe writes about the markets for Business Week Online.