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To: dennis michael patterson who wrote (36325)	1/24/1999 7:45:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 8 Once significant numbers of other targets (ie, female, HOH, HHI < $50,000) come online, so too will the advertisers who want to reach them. They will certainly pay a premium to get their message in front of that audience, no matter what they are doing on the web. So while we will have to wait and see when exactly the promise of targeting will have a direct effect on Excite's top-line, the promise has already benefited Excite's shareholders -their targeted advertising capabilities were a key determinant in the 58% premium Excite received over its traded market value. December Quarter Earnings: One of the assumptions Internet investors have held tightly have been the ability of the companies in this sector to grow significantly and outperform expectations. And one of the reasons we like to perform a round-up of sorts of the season's operating results is because this big telescope view affords us some insight about where, directionally, the entire sector is headed, and how fast (or slow) it's going to get there. For many Internet companies, Q4 was/is expected to be a banner quarter, most especially on the top line thanks to both consumer and advertiser interest in the medium for the holidays. Of the 15 Internet companies that have reported to date, 10, or 2/3rds, have reported positive surprises in their December quarter results, suggesting that, just like Q3, the Internet sector continues to hum along nicely. The distribution of positive surprises, so far, has been wide; advertising-based models have performed well (Yahoo and DoubleClick), e-commerce- focused business models nicely beat estimates (Amazon, E*Trade, Preview Travel), as did infrastructure providers (VeriSign, Real Networks), suggesting that all parts of the Internet economy remain robust. Though we still have a few important announcements to go (AOL, InfoSeek, Broadcast.com, Ebay, GeoCities, ISS Group, Inktomi, CMGI), preliminary results suggest a nice Q4 all around. As importantly, the tone and guidance for the first half of 1999 could be critical for the sector's price action near term; we look toward the AOL, Amazon, and Ebay conference calls (the 27 th and 26 th respectively) to set the tone for the upcoming few months. Stay tuned. Company Watch America Online Not Quite Broadband Last week, AOL announced a strategic partnership with Bell Atlantic to offer high-speed DSL access to AOL subscribers on the East Coast (Bell Atlantic's service area), starting this summer. The DSL upgrade will be available to 7.5MM Bell Atlantic homes by the end of 1999 and >14MM by the end of 2000. This offering will be available to approximately 4MM current AOL subscribers (27%). The main advantages to DSL include: 1. “always on” access (no dial-up required); 2. computer and phone can be used simultaneously on a single phone line and; 3. connection speeds of up to 640 kbps per second, or more than 20 times 28.8 kbps. While the AOL/Bell Atlantic announcement deserves some attention, keep in mind that every indication we have leads us to believe that cable modem will be the real broadband play, not DSL. Also noteworthy is the fact that this is not an exclusive deal and in the coming months, we believe AOL will announce a number of these deals as a way to keep subscribers that want high-speed access in the AOL family, instead of turning to a telco or cable provider's branded service (Excite@Home, RoadRunner, etc.). So while this announcement illustrates AOL's ability to leverage its subscriber base (Bell Atlantic will have the opportunity to market certain other