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To: Tony Henriques who wrote (9986)	2/17/1999 2:50:00 PM
From: waldo	Respond to of 37507

>>LK: In a recent report you said you think the Internet is underhyped, can you explain what you mean? MP: Despite the valuations, I do think the Internet continues to be fundamentally underhyped. The actual impact — that the Internet is now being adopted by business and consumers — is not quite appreciated. It's happening much faster, and the implications are much bigger than are fundamentally recognized. The valuations are extraordinary. But I think that's a manifestation of a whole number of factors. First, high valuations are a manifestation of an increasing realization that this Internet "fad" is real. Second, the huge amounts of money coming in from institutions, retail investors, on-line traders, etc., are chasing very little float and market cap on a relative basis. Third, not enough time has gone by to truly have the hundreds of different kinds of companies that are needed to come to the public marketplace, both in terms of equity and debt. As a result, we have what is probably an inordinate amount of our hopes for the Internet invested in a handful of companies. That's all we've got the option to do so far. This situation is very similar to the early 1980s when investors were just beginning to understand the broader implications of microprocessor economics for the PC industry. So yes, there will be financial volatility as we saw in 1996. That year we had a correction in the Internet market after the financial hoopla in 1995, where we saw Internet stocks correct 80% to 90%. That could happen again. But at the same time, we continue to be focused on the long-term fundamental opportunities for the leaders; as a result, we're still over-weighted on the group. We're still saying to investors, "Buy on weakness as long as there are no major fundamental issues you can point to," because the fundamental adoption of the Net is still growing faster than we had originally expected. << Part I: Still Over-Weighted On Internet Stocks Michael Parekh, Top Internet Analyst & Managing Director, Investment Research, Goldman, Sachs & Co. multexinvestor.com W