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To: Bill Harmond who wrote (41340)	2/20/1999 1:41:00 AM
From: H James Morris	Read Replies (1) \| Respond to of 164684

William, your right. The "Thing" has caused another SEATTLE book seller to bite the bust. >> by Jake Batsell and Robert Jeffrey Jr. Seattle Times stff reporters The Elliott Bay Book Co., the independent Pioneer Square bookstore that serves as Seattle's unofficial literary hub, will soon be sold to an Eastside developer who is building a reputation for running community-centered bookstores. Walter Carr, Elliott Bay's only owner in its 26 years, said he is in the final stages of discussions with Bellevue developer Ron Sher, owner of Third Place Books in Lake Forest Park Towne Center. Sher also owns the Crossroads shopping center in Bellevue. Carr and Peter Aaron, Third Place's executive vice president, said this morning that they expect the deal to be completed within 10 days. "It is really a joining of a couple of unique enterprises by themselves, but together they'll combine great strategies," Carr said. At the bookstore this morning, Carr described himself as melancholy about the sale, yet also proud of the impact the bookstore has had on the community. He also said he admires Sher and did careful research before deciding to sell to him. "This sale will ensure the continued success of Elliott Bay bookstore," he said. Elliott Bay's fate had been the subject of speculation over the past year as Carr considered his options in the face of dwindling sales and increased competition from chain superstores and Internet booksellers such as Amazon.com, based in Seattle. "It's very difficult to compete today against larger enterprises that always seem to get the books for less," Carr said. Carr and Aaron said that much of what makes Elliott Bay unique, including its vast selection of new books and extensive hosting of authors for in-store appearances, will continue as is under the new management. Third Place will bring in an added emphasis on used books and will convert Elliott Bay's downstairs cafe into another Honey Bear Bakery. Sher owns other bakeries with that name. Aaron said Elliott Bay also will likely be reconfigured to allow more room for patrons to sit, read and linger. Elliott Bay customers browsing shelves this morning were hopeful that the bookstore would retain the qualities that drew them in the first place. "It is a nice, comfortable bookstore," said Valerie Nishimura of West Seattle. "The staff is wonderful, and if you ask for a recommendation they provide very good advice." Rick Donaldson of Spokane travels to Seattle twice a year to shop at Elliott Bay. "As long it retains the character and not be a Barnes & Noble, I will continue to come," Donaldson said. Third Place Books, a 44,000-square-foot bookstore that opened in November, boasts an inventory of more than 200,000 new and used books and houses five restaurants. Third Place said Carr's key management team will remain with the business, including head buyer Rick Simonson. Simonson, a 24-year veteran, heads Elliott Bay's popular author-readings program. Sher, in a prepared statement, said Elliott Bay "is a Seattle institution as much as the Pike Place Market and the Space Needle. It is a privilege and responsibility to bring this community treasure into the Third Place Books family," he said. Carr said he is heartened that his store will be sold to another independent bookseller, rather than being gobbled up by a national chain or forced to close entirely. "It's a mixture of pride and tears and a little bit of relief," Carr said. "To be able to say that there's a continual and hopeful future . . . is worth it in itself." Jake Batsell's phone message number is 206-464-2595. His e-mail address is jbatsell@seattletimes.com Copyright © 1999 Seattle Times Company <<

To: Bill Harmond who wrote (41340)	2/20/1999 3:04:00 PM
From: Glenn D. Rudolph	Respond to of 164684

3 positive: (1) AOL's announcement that it reached 16 million customers in 40 days re-proves the benefits of increasing returns, and (2) First USA's commitment of $500 million to advertising on AOL over the next 5 years re-proves the Internet-as-important-new-medium thesis. Other than that, we can't point to any earth shattering news out that would cause us to re-visit the core reasons we like this sector's growth potential going forward. On to our second question. Has the valuation profile of this group changed permanently? Well, it's impossible to argue that the valuation profile hasn't changed at all, of course; these stocks' move down are of the magnitude and size that would suggest that a re-valuation has occurred. For our part, we think it is better to ask if that re-valuation has changed for the long term, which we think it hasn't. Investors may recall aggressive retraction in this sector last July and again in August/September when macroeconomic events (market liquidity, risk tolerance, Fed interventions, bond/currency market activity) caused a shift in appetites for these stocks. Things looked terrible then, but eventually the fundamentals of these Internet companies began to look so good (and have proven to be in the last handful of quarters) that market participants came around and recognized their continuing (important) role in the stock market as the preeminent growth stocks of the year. Though the market's demand for these shares may have changed, it did so only temporarily, since the core fundamentals of these Internet companies was proceeding apace. And today, we can see no reason why the fundamentals for these companies are going to weaken measurably, which would be one of the only reasons why we would consider becoming structurally less bullish on them. The lesson that all tech investors are aware of (though not all practice) is that major retrenchments that are the result of changed market appetite are buying opportunities. Certainly these retrenchments can augur a shift in fundamentals, but we've scanned the horizon and have come up wanting on that front. Which brings us to market calls and ratings. Our own philosophy on ratings changes and short-term timing calls is simple: we're awful at them. This sector is notoriously difficult to call from a timing standpoint thanks to the limited history and even-more limited operating data available for analysis. And besides, we'd rather keep you invested (and interested) in these Internet stocks until major operating changes take place than move folks in and out of them. Their velocity is dangerous, they're notoriously volatile, and they're thinly traded, making trading in and out of these names difficult and costly for even the savviest of traders. Most investors (not all, of course) are interested in capturing the widest arc of a stock's appreciation. Though that arc can sometimes be painful (one need only remember AOL's persistent deflation in the summer of 1996) in the short run, we have confidence that, longer term, it should be nicely accretive to one's portfolio. So no change in sector fundamentals, only a change in appetite, which sounds to us like a nice buying opportunity. We don't want to become known as Internet myrmidons, but we're staying long and putting money to work, especially in the core names (AMZN, AOL, YHOO). With that, we thought it would probably be helpful to go through a few of out Internet First Principles, those series of Internet investing rules we keep under our pillows at night, so that we can regain some context in these turbulent times:

To: Bill Harmond who wrote (41340)	2/20/1999 4:05:00 PM
From: GST	Respond to of 164684

William -- gold? Ya, crazy compared to the nets right? <LOL>. Do you remember when it pushed up around $1,000 an ounce -- well that is how long it is going to take for most of your bets to make new highs <G>, just an opinion of course -- but these things happen. Do you also remember what it felt like to believe in the net bubble before prices really went into the stratosphere? Months ago <G> -- BTW I like your suggestion that <G> should now stand for gold. Lets let everybody else know too.