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To: D. Swiss who wrote (81478)	11/20/1998 9:25:00 AM
From: Dalin	Read Replies (2) \| Respond to of 176387

To all: This may have been posted before, but here it is: 09:07 ET Intel Corp (INTC) 112 7/8: Prudential Securities downgrades issue from "strong buy" to "accumulate," citing valuation. Issue indicated 1/8 higher. •09:05 ET Semiconductor Equipment Stocks: DLJ expects book-to-bill ratio oft 0.73-to-1 to have a positive impact on this universe of stocks, particularly front-end equipment manufacturers. D.

To: D. Swiss who wrote (81478)	11/20/1998 9:50:00 AM
From: JRI	Respond to of 176387

Drew- The internet stocks excessive valuations are due to a number of things.. (1) They have small floats... (2) They are primarily owned by individuals (not institutions)....there is a lot of daytrading (obviously) going on here..small lot trades.... (3) There is an (ever-increasing) group of the investors who have bought these issues (rightly or wrongly) the following premise: Profits are not important right now....."mindshare" is....so as long as we (the internet companies) keep announcing deals, growing top line growth (at 100, 200% +), and growing "mindshare"....we should be rewarded with rapid appreciation (of stock price).. No other group of stocks (maybe biotechs) enjoy such a priveledge.. (4) Internets are sexy...ubiquitous....and fairly easy to understand (does anyone really understand or have exposure biotechs in there daily dealings?)...This sucks in the common investor....(Easy for a broker to pitch)... (5) These companies are growing at phenomenal rates... (6) These companies have rewarded investors richly....so money keeps flowing in.....smart and dumb....(Dell has "suffered" from this too).... (7) We are in a bull market Although almost every internet stock in the universe is overvalued by using all "normal" valuation methods, it is phenomenal to think that the internet has reached the penetration rates that (radio needed 40 years, TV needed 25 years) in just 3-4 years...That is phenomenal growth... Also, bubbles can go on for quite a while before they puncture....Some of the internet stocks will survive, and do pretty well (over a several year period)...Wo be it to the investor that holds a weak sister...they will be destroyed when the market applies more normal valuation methods to these companies (and drops the method I listed above).... The new Arthur Andersen commercials are very cool.....definently breaks the "boring" imagine...much better than Unisys's (ads)

To: D. Swiss who wrote (81478)	11/20/1998 1:53:00 PM
From: Chuzzlewit	Respond to of 176387

Drew, that's a chimera that I cannot answer. Here's an example of how screwy things can get. The most recent Amazon.Com "earnings" shows A COGS of 77.5% and a marketing/sales expense of 23.7%. Assuming that these two expenses are variable and all other costs are fixed it should be obvious that they can never show an operating profit (because the total of those two costs is 101.2% of sales) unless there is a significant increase in the price they charge for books (which would make their offerings much less attractive to buyers), a significant decrease in the cost of books (possible, but I can't see distributors giving them much more than an additional 10% discount, which would drop their COGS to perhaps 71%) or a significant decrease in their marketing and sales expense. So I don't understand all of the hoopla. When I see these guys showing a positive gross profit I might be willing to wait to see some earnings from operations. But so far I don't see the potential for earnings. P.S., I have been kind in this analysis because there is definitely a variable component in G&A. But what do I know? TTFN, CTC