Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Healthcare.com Corporation (Nasdaq: HCDC)was [HDIE] -- Ignore unavailable to you. Want to Upgrade?

To: Starduster who wrote (6531)	12/1/1998 11:50:00 AM
From: Andrew H	Respond to of 15094

Now both bid and ask under 3. Doesn't look like news is imminent. Depressing.

To: Starduster who wrote (6531)	12/1/1998 12:08:00 PM
From: MeDroogies	Read Replies (1) \| Respond to of 15094

Actually, I don't think it is likely that most of the Inet stocks will meet revenue figures to justify their prices. Why? Due to the extremely competitive nature of the Internet. It is literally a free-for-all. In fact, it is probably the closest thing to a pure market that we've ever seen. As a result, if you know your basic economics, profits are minimized in a pure market. Typically, you maximize your return when marginal costs match average cost, making big profits unlikely. In order to overcome this, several things have to happen. The first is consolidation (which is currently underway), in which many firms merge and buyout each other in order to provide economies of scale and scope. This is costly, often inefficient and saps resources. Second, brand awareness and market penetration have to translate into market share. This, too, is happening, but is very slow and very volatile, because the internet has such low barriers to entry. For a stock like Amazon to start generating #'s that justify its absurd price...well, that could take up to 10 years! Especially the way Barnes and Noble is starting to address their online business. Sure, they lost money...but they have assets, cash flow, and profits that they can tap into. As long as they hinder Amazon....well, Amazon may never see a profit...they'll have to keep their prices too low. Others, like AOL, will do well just based on the nature of their business. Yahoo, as well, is in a good position...but could be undercut at any point should a major media concern decide to buy one of their competitors and really turn the heat up. As for companies like Double Click and 24/7...that's a good business. But, they have to start modelling themselves on the TV rep firm industry. Right now, they take up to 50% of revenue and undercount page visits. As a result, it almost pays to remove your webpage from their representation and form your own sales force. Note, I said ALMOST. At any rate, the 24/7's of the world - even with their large % take of revenue - are having problems of their own. Imagine how they'll perform if they switch to a more traditional 20% of revenue......... I'd say for most of the Inet companies, you won't see profits to justify prices for at least 5-10 years, unless there are some major changes in the market.