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Technology Stocks : About.com (BOUT) -- Ignore unavailable to you. Want to Upgrade?

To: Jason Riche who wrote (42)	3/19/1999 1:11:00 AM
From: Jason Riche	Read Replies (1) \| Respond to of 438

add on to last message Here is the article that I got from www.iionline.com/ It basically compares ZDNet to CNET. Just thought it would be appropriate with all the internet ipo talk. (note:please excuse the wrapping of the lines.) UPDATE: Ziff-Di-Dee-Davis! Whiz Bang IPO Coming Up Staff Writer: Craig Schneider (3/10/99) What do investors love most? Internet company stock-splits, Internet acquisitions, or Internet IPOs. We'll know soon enough. Cnet Inc. (NASDAQ: CNET) is up more than 96% over the past five days on the heels of Monday's 2-for-1 split. Cnet has said it will use a portion of the from a $150 million sale of convertible subordinated to make acquisitions. Meanwhile, Ziff-Davis (NYSE: ZD) said it plans to take its Internet-unit ZDNet public during the week of March 29. As of February 11, the IPO was priced at $11 to $13 per share for 10 million shares. We warned investors in January to stay away from Ziff Davis. The stock was at about $18.00 at the time, slightly below a recent $18.88. Click here to read Craig's piece from January. Why are we positive on Ziff Davis now? Well, it's not that we're terribly excited about the company's fundamentals per se. We think that the current market environment is very positive for Internet IPOs and think that ZDNet may benefit from Cnet's recent astounding success. On Monday, Cnet shares were up $16.50, to $120 on volume of 7.2 million shares, or more than 9 times its average daily volume. The stock hit a 52-week high of $123.38 in earlier trading, sending its market cap over the $4 billion mark. Just over a month ago, the company was trading in the $35-$45 range. ZD is now worth $1.9 billion on the market. While it's unlikely that ZDNet will have the same market cap as Cnet, the companies share some striking similarities. Asides from content that focuses on technology, page views and traffic are very comparable. January's Media Metrix figures place traffic at ZDNet's site at 8.4 million unique visitors, ahead of Cnet's 7.1 million. However,the fourth quarter of 1998, Cnet reported an average of 8.2 million page views per day, topping ZDNet's 6.5 million. King says ZDNet is getting more people to its site, but people visiting Cnet view more pages. What's the likelihood that ZDNet's IPO will pack as much punch as its competitor? Given the current market sentiment, the stock is sure to see a boost on the first days of trading. But 'it's hard to say how they will mirror each other,' says Daniel E. King, a LaSalle St. Securities analyst following both companies. While Cnet is a profitable 'whole company,' he says, ZDNet is an unprofitable tracking stock that ZD is taking only 15% to 20% public. ZDNet had revenue of $56.14 million in 1998, outperforming Cnet's $49.4 million top line. But while Cnet's online unit comprises 87% of total revenue, which includes a television division, ZDNet comprises just 5% of ZD's total, which is primarily magazine publishing. What happened to profits? In the third quarter of 1998, ZD's management touted the online division as profitable, but once they divided up the cost in preparation for spinning it off and signing licensing fees, ZDNet fell back into the red. 'A little disappointing for analysts,' says King, 'but I don't think it's a significant concern for that IPO.' Cnet's online unit reported operating profits of $2.5 million in 1998, versus ZDNet's $7.5 million loss for the year. King also expects the Cnet online unit to generate $84.6 million in 1999 revenue with earnings of $0.34, split adjusted. Some analysts expect the same revenue from ZDNet this year. Bottom Line: Given the Internet IPO frenzy, investors are sure to snatch up ZDNet with zeal. Give it time and the company could possibly follow in Cnet's footsteps.