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To: dennis michael patterson who wrote (33825)	1/9/1999 10:51:00 AM
From: Grant	Read Replies (1) \| Respond to of 164684

"But I still maintain the first 3 days of next week are down for the overall market. Then it's up again!" Not IMHO...YAHOO reports giving the Inuts a pop on Monday and Tuesday. Grant

To: dennis michael patterson who wrote (33825)	1/9/1999 7:47:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 7 Internet changes entire segments of the economy by re-organizing industry value chains (please see our original explanation of this in the 11/20/98 Internet Capitalist, “Porter Re-visited”). We are attempting to inculcate a sense of the Internet's underlying importance to the business of allocating capital and to illustrate to institutional investors how broadly the Internet will impact many large and important parts of their portfolios. We've watched with some bemusement as some of the larger retail brokerage shops (Merrill Lynch in particular) has struggled with the idea of (and inevitable conflicts that arise from) embracing the Internet as a new customer distribution and acquisition channel. For its part, Merrill's thinking seems to have evolved in fits and starts; publicly rebuking the Internet as being truly destructive to the financial services industry and to consumers and then, most recently, offering their research for free online in an attempt to test the waters for demand. As you probably know by now, Merrill's efforts generated 90,000 registered users (we're willing to bet that many of those are sell-side research analysts and investment bankers at competing firms), more than 2,000 of them having become brokerage clients. That the Street derives a substantial portion of its revenue from retail commissions is, of course, no secret. Of course, investment banking, proprietary trading, and a host of other fees also make Wall Street a nicely profitable business if executed correctly. Aggressively embracing the Internet, that is, empowering consumers with their own financial tools and trading capacity, can potentially disintermediate retail brokers, who have traditionally acted as a liaison between the retail financial services consumer and their broker. Within Merrill Lynch, of course, the single largest constituent body of employees remains retail brokers. Offering Merrill Lynch research and trading capacity over the Internet creates a substantial conflict of interest within the Merrill Lynch corpus. Faced with a choice of doing what is right, valuable, and, let's face it, inevitable for your customers or doing what's right for the biggest set of employees you have, what would you do as a manager of the business? Not an easy answer. How Merrill Lynch faces these tough decisions and navigates these conflicts will provide many object lessons for other larger corporations that understand that they must embrace the Internet in some meaningful manner, even if it means, as they say, eating your young. The Internet's Role As Business Medium News this week from the Securities and Exchange Commission, that august regulatory body, that they have decided that the display of a corporation's web site address on all corporate prospectuses filed with the commission be mandatory struck us as yet another data point in our thesis that the Internet is fast becoming a medium for businesses and consumers alike. In and of itself, news that government agencies like the SEC are embracing the Web ordinarily wouldn't warrant a mention. In this instance, however, the web's “intrusion” on the practices of SEC officials has even overcome the forces of litigation. Apparently, many corporations have been unwilling to include their Web address on their prospectuses for fear that the Web site's content would be summarily included in the prospectus., by virtue of its mention in the official offering prospectus. Since many companies pay lots less attention (well, lawyer-type attention anyhow) to the content on their Web sites than in their offering memoranda, well, it doesn't take a securities lawyer to understand the potential for liability if the URL were on the cover of a bond or stock offering filed with the SEC. So the Web's triumph over one of the most litigation scarred industries in the world