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To: Jan Crawley who wrote (41385)	2/20/1999 12:27:00 PM
From: H James Morris	Respond to of 164684

>>James, are you guys "hyping" Mir?!<< Jan no. I'm not, but the elephants analyst's are. After my experience with the "Thing". I really stick close what the elephants analyst's say, because they're owners come right in, and do. Did you notice yesterdays move. It's amazing what just a Blogett. Can do. >> Seattle, Feb. 19 (Bloomberg) -- Shares of Internet companies rose after CIBC Oppenheimer & Co. analyst Henry Blodget said it's time to buy industry bellwethers Amazon.com Inc. and Yahoo! Inc. following recent price declines. Shares of Amazon.com, the No. 1 online book and music retailer, rose 12 3/8 to 101 7/8, while Yahoo, the No. 1 online directory, rose 6 1/2 to 135 3/8. Blodget wasn't immediately available for comment. Since hitting records in mid-January, Seattle-based Amazon has declined by about half, while Yahoo has dropped about 40 percent. On Wednesday, Softbank Corp., Japan's top software distributor and a major shareholder in dozens of Internet ventures, sold part of its stock in Yahoo to finance new investments. Blodget is telling his clients it ''may be time to buy'' shares of the companies, CNBC reported. Shares of Amazon surged in mid-December after Blodget said it could reach $400 a share, prior to its 3-for-1 stock split. Other Internet-related shares rose. Internet access provider At Home Corp. rose 3 11/16 to 100 3/4. Broadcast.com Inc., an online broadcaster, gained 2 9/16 to 70 11/16. Internet advertising agency DoubleClick Inc. rose 1 to 83. No. 2 online directory Excite Inc. rose 4 1/16 to 95. No. 4 Internet directory Infoseek Corp. rose 1 15/16 to 61 9/16. Lycos Inc., the third-largest Internet service, rose 3 1/4 to 87 1/2. Cnet Inc., which runs World Wide Web sites and television programs about technology, rose 6 to 116. GeoCities, a free homepage community, rose 4 to 86 1/2. 16:37:25 02/19/1999 For more stories from Bloomberg News, click here. (C) Copyright 1999 Bloomberg L.P. <<

To: Jan Crawley who wrote (41385)	2/20/1999 3:06:00 PM
From: Glenn D. Rudolph	Respond to of 164684

6 pricing the service for $9.95 or lower (to certain AT&T customers the first year was free). The thought was that, consumers, in a commoditized market such as ISP dial-up services, would make the rationally logical choice of choosing price over everything else as the determinant factor in their decision. History, of course, proved them remarkably wrong. AT&T Worldnet today has 1.5 million subscribers; during the time AT&T rolled out Worldnet and today, AOL has added something like 10 million new subscribers. What went wrong with AT&T's assumptions? After all, they had millions of dollars in marketing muscle, a billing relationship with consumers, a natural up-sell opportunity, and an arguably better brand name than AOL, but still was put to shame by AOL's remarkable growth in subscribers over the next few years. Non-intuitively, the ISP business was still a commodity market, but wasn't acting like one; price mattered to consumers, but wasn't everything. Other causal factors (like AOL's content, like AOL's Internet-brand power, like AOL's viral marketing and increasing returns advantages) took hold of the consumer decision process as well, allowing AT&T to grab just a small minority of the ISP business to be had from 1996 till today. Of course, one could argue that the exact dynamics of consumer decision making between what ISP to go with and what book vendor to purchase from are different, and we would agree. But the AT&T Worldnet example holds important lessons for Internet investors as they contemplate the Price Is King thesis, and it is this: not all commodity markets are governed by price alone. Factors like quality, customer service, brand, availability, shipping choices, context (related product information), content (reviews, comparisons, etc.) all matter to a greater or lesser degree depending on the consumer. Sure there are consumers who will buy on the Internet that will be focused exclusively on price and will hunt down the best available price from any vendor. We tend to believe that they are less than 20% of the market; like those same folks that Bob Pittman refers to frequently that like to know what their DNS entry and IP address are and want to install three discs for their Internet access service, they don't represent a majority, but rather a vocal and peripatetic minority. Whatever you do, don't base a business model (or an investment thesis) on them. Price certainly matters, don't get us wrong. If Amazon.com had prices that were 50% higher than their competition, we'd be worried (very worried) about their long term prospects. But they aren't; they are within an acceptable (5- 10%) range that will act to move consumers' attention away from price and on to the very many other pieces of the Amazon “value bundle”. Make no mistake, Amazon's management team recognizes the importance of creating a consumer value bundle that is not strictly price-based; their comments on their December quarter conference call about becoming the “best customer service company in the world” are testament to this end. As well, it is important for investors to remember that, Amazon's value-bundle efforts aside, they benefit too from being an aggregator of online retail choices. In a world of increasing choices for online retailing, the vast majority of consumers, and certainly the next 35 million that come on to the Internet in 1999, will want and need an aggregator of those choices. And Amazon, like AOL on the content side, is their aggregator of consumers' retail choices. Why is this important to the value bundle we are speaking about? The costs of search (which is measured in a currency more valuable than