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To: Dell-icious who wrote (36394)	1/24/1999 6:03:00 PM
From: Bill Harmond	Read Replies (4) \| Respond to of 164684

I sold my Internet stocks and everything else over the past two years when I thougt there was important market risk. This is just another one of those times. It's interesting that Internet stocks are weakening early this time.

To: Dell-icious who wrote (36394)	1/24/1999 7:51:00 PM
From: Glenn D. Rudolph	Respond to of 164684

The Internet Capitalist SG Cowen Internet Research 17 The unique nature of this ad buy, when coupled with agencies' tendencies to move slowly (and Excite's current small inventory available for this type of buy) have kept a lid on management's ability to really drive revenue in 1999. They are optimistic, but guarded. As a result, much of Excite's vision, of creating the largest and most robust database about Internet users anywhere and selling these customers for a premium to advertisers and merchants, continues (lamentably) to be just on the cusp of emerging (revenue per 1000 page view increased from $8.59 in Q3 to $9.79 in Q4, up 14% q/q). The Balance Sheet Finally Turned The Corner… Receivables improved markedly; DSOs dropped 15 days to 61 days, with cash flow from operations increasing from roughly break-even last quarter to $25 million this. Backlog grew to $254 million, with management “really” confident with about $100 million of that figure. Cash on the balance sheet stands at $61 million. And What About The Stock?… Irrespective of how the fourth quarter is spun by the market, the stock is in the arbitrage traders hands now, which means, like Netscape/AOL, that if @Home goes up (or down) big, so to does Excite. And since we don't officially cover @Home, we officially go to an NR, or “no rating”. We have every reason to think the deal gets done and every reason to think that it was a smart move for @Home and a nice boon to Excite shareholders (and vindication of George Bell, et al's vision), but the stock has a life of its own at this point. Sterling Commerce: In the last edition of The Internet Capitalist, we spoke of our frustration with Sterling's stock because it cannot seem to get out of its own way. We suggested that we'd be watching closely to see if the stock finally starts to reflect the advance in the company's fundamentals over the past 4 quarters and break through that magic $50 level. Well, our frustration continues; almost as soon as it approached that magic $50 level, it started right back down toward $40, where it stands today. Sterling will report their earnings the first week of February; we'll keep you posted on why the stock doesn't track the fundementals. Observations Wall Street Wake-Up Call By now, we hope that readers of The Internet Capitalist recognize what has now become a recurring part of these pages: our discussion of how the 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”). Our goal has been to inculcate a sense of the Internet's underlying importance to the business of allocating capital and, in that, illustrate to institutional investors how broadly the Internet will impact many large and important parts of their portfolios. Our value chain focus has brought us to many different parts of the economy, but none so close to home as the focus we take this week: Wall Street itself. News from ETrade this past week that they are starting an online investment bank, EOffering, with other investors created much buzz not because the idea was entirely novel (Wit Capital has been proselytizing this idea for some time), but because of the backing that the new venture received from Sandy Robertson (of Robertson, Stephens). The idea, once a novelty and source of “what if?” banter on the Street, has now gained real currency, so we thought we'd explore some possibilities and do a bit of free thinking on the matter. [It helps to know in advance that we think this could be the tip of a very large iceberg.] At its most basic, Wall Street is a group of companies that bring together supply and