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To: Jan Crawley who wrote (26527)	11/17/1998 9:45:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

K-Tel Stock Drops 32 Pct. Tuesday .c The Associated Press By ERIC R. QUINONES NEW YORK (AP) -- K-Tel International, the company that refused to let K.C. and the Sunshine Band and the Bee Gees go away, became chic on Wall Street this year simply by announcing it would pitch its compilation albums and other wares on the Internet. But K-Tel fell off the Internet-stock wave Tuesday, as its shares plunged 32 percent after the Nasdaq Stock Market told the money-losing record seller that it lacks the required assets to remain listed. K-Tel stock will continue trading as the company appeals for an extension from Nasdaq and tries to raise more capital to satisfy listing requirements, a process that could take several weeks. But Nasdaq's warning offered a poignant reminder that the Internet is not yet a profitable business for most companies, despite the waves of frenzied buying in response to seemingly any online-related announcement. ''Stocks have immediately moved up based just on the idea and everybody wanting to be involved -- at some point they look at value. Perhaps with K-Tel it's the first good look at what the reality might be,'' said A.C. Moore, chief investment strategist for Dunvegan Associates in Santa Barbara, Calif. K-Tel shares fell $5.62 1/2 to $12 in heavy trading after the company announced the Nasdaq warning in a regulatory filing. Following its recent pattern of huge swings, the stock ranged from $11.62 1/2 to $21.25 on Tuesday. K-Tel said in its filing with the Securities and Exchange Commission that if it is removed from trading on Nasdaq's main exchange, it will move to a less prominent market run by Nasdaq for smaller companies. Nasdaq requires listed companies to have net assets of $4 million. K-Tel, based in Calabasas, Calif., has net assets of about $1 million, according to its filing. K-Tel lost $3.1 million in its fiscal first quarter that ended Sept. 30, reversing profits of $1.2 million a year ago, as sales dropped 25 percent to $18.8 million. In its last full fiscal year, K-Tel lost $2.4 million, compared to profits of $3.2 million a year earlier, although sales did rise 13 percent to $85.6 million. Despite its losses, however, the company famed for hawking repackaged musical hits on TV has been an on-again, off-again Wall Street darling based on its name recognition and Internet optimism. The first wave of K-Tel frenzy came in April and May, when its stock jumped from about $4 to $40 after the company said it would begin selling its products online and then acquired the Internet publishing rights to Billboard magazine's weekly music and video best-seller charts. After dropping to $5.62 1/2 by Oct. 9, K-Tel shares leaped again this month after the company agreed to create a store on Playboy's Web site and to feature its K-Tel Express site on the Microsoft Network. The stock was as high as $39.12 1/2 on Nov. 11. K-Tel has not been alone in the dizzying love-hate relationship investors have formed with the Internet. Stocks of established online companies including America Online, Netscape and Yahoo have seesawed as lesser-known players such as Market Guide and Track Data became just brief shining stars. And the mood shows no signs of changing. In just the past week, stock in AvTel Communications soared from $2.37 1/2 to $31 after the company announced it would launch of a high-speed Internet connection in California. But the shares tanked after AvTel said it was not planning a nationwide launch of the service, closing Tuesday at $7.87 1/2, down $2.62 1/2, or 25 percent, on Nasdaq. Moore of Dunvegan Associates said the wild ride of Internet stocks currently makes them impossible to value. ''I'm not suggesting there's nothing to them. It's a gigantic change in this time where we're all going to be viewing things and buying things differently,'' he said. ''But, at the same time, there are a lot of interlopers and there are a lot of pretenders that are on the coattails of this great Internet change.'' AP-NY-11-17-98 1754EST