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To: Curlton Latts who wrote (46945)	3/23/1999 2:52:00 PM
From: Glenn D. Rudolph	Respond to of 164684

19 Valuation Watch “With secret course, which no loud storms annoy, glides the smooth current of domestic joy.” - Samuel Johnson In these, the last two weeks of the March quarter, we expect to encounter more and greater “loud storms” which could certainly provide for some nasty surprises on the trading front for some of these stocks. Simply, we have entered into a set of unusual circumstances; quiet period skittishness and rumor spreading (to which management teams cannot respond) , lingering concern about first quarter results (will Q1 revenue be sequentially higher than Q4?), and a nice move up from these stocks' recent lows (some as much as 40%). Conditions like these can create some nice buying opportunities, especially since we believe that 1999 will be a very Darwnian year in the Internet space. Just like Wendy Brown, AOL's VP of e-commerce suggested above, some Internet retailers “get it”, and some don't, which suggests that those that don't (the chaff) may provide us with some data toward that end in their March quarter results. In particular we will be paying close attention to those Internet content and commerce players who (1) have had to pay large sums for traffic, (2) have a less differentiable position within narrow vertical categories, and (3) haven't surprised much on the upside in their December quarter. To the extent that some of the Internet names disappoint, we suspect that the whole group could experience weakness over the next two weeks, which we would view as a great buying opportunity for our Strong Buy-rated names (AOL, AMZN, YHOO, DCLK) which suffer from none of the three conditions we delineated above. Having said that, for the last four or five quarters, the leaders in the Internet space have shown a tendency to rally right up to their reporting dates (which start on April 7 th for YHOO). If this remains true this quarter, we suspect a pause in all of these names may manifest itself for several (or more) weeks after the Q1 reporting season has run its course, specifically the last week in April. No doubt the next few months will be hard on the stomach for Internet investors, with plenty of new news to digest and lots of speculation about how 1999 is going to shape up. We're about to get the first real data to this end, which could, for some Internet names, upset the “domestic joy.”