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To: H James Morris who wrote (48865)	4/4/1999 4:01:00 PM
From: H James Morris	Respond to of 164684

>>>>AOL KOs Coke in Changing of Guard in Growth Stocks Vital Signs As great as it was to see the Dow close above 10,000 on Monday, the real action last week continued to be concentrated in the stocks of the so-called new economy, including America Online, Microsoft, Cisco Systems and Amazon.com. Impressive performances by this group helped lift the Nasdaq index by 3.1% in the week's four trading sessions, while the Dow fell back below 10,000 to close the holiday-shortened week Thursday at 9832, up 10 points, or just 0.1%. For the year, the Nasdaq is now up 13.7%, well ahead of the gains of 7.1% for the Dow and 5.3% for the Standard & Poor's 500 Index. The excitement about Nasdaq stocks has been building in recent weeks. The reason could be that with yesterday's growth stocks, such as Coca-Cola and Philip Morris, faltering, investors figure they might as well pile into AOL and Yahoo. After all, these are the companies that are cashing in on the Internet and its supposedly limitless potential. Reflecting the eclipse of the old growth stocks by the new, AOL last week passed Coca-Cola in market value. AOL, which has become the must-own Internet stock among institutional investors, partly because it's the only pure 'Net issue in the S&P 500, surged 24 5/16 to 150 last week after hitting a new peak of 155, aided by the announcement of a marketing agreement with Sun Microsystems. AOL has nearly doubled so far in 1999. It was a different story in the Internet "space" as Broadcast.com, a Net broadcaster that had just $22 million in revenues last year, reached a deal to be purchased by Yahoo for $5.7 billion in stock, or $130 a share. Broadcast.com, which rose 19 1/2 to 130 last week, now is up more than 14-fold since its initial public offering last July. Yahoo could be so generous because its own shares, which gained 8 3/8 to 179 3/4 following a favorable investor reaction to the deal, trade at almost 500 times projected 1999 profits. Amazon jumped 32 to 171 after announcing that it will start an auction site to compete with eBay, which dropped 16 to 138 5/8 . Microsoft was up 3 5/8 to 92 11/16, topping $500 billion in market value, while Cisco advanced 4 3/4 to 109 15/16. Charles Pradilla, the strategist at SG Cowen, says the speculative boom in the Internet stocks, as evidenced by the Broadcast.com deal, suggests caution about the market outlook. "This kind of speculation usually occurs at the end of bull moves," he says. Pradilla also is concerned about the rise in bond yields this year and what he views as unreasonably high investor expectations about future market returns. "You've got day traders who think P/E means physical education," he says.<<