Sunday April 18, 7:01 pm Eastern Time
Internet stocks spark new Australian gold rush
By Victoria Tait
SYDNEY, April 19 (Reuters) - They've been called everything from the prime real estate of the new millennium and the gold rush of the '90s to a big load of hooey.
But in Australia as elsewhere, Internet euphoria has swept the stock market.
''There's a lot of happy money in the market at the moment,'' said Ramin Marzbani, chief executive of Sydney-based Internet research group www.consult.
Australian investors, like their U.S. counterparts, have been scrambling for cyber-scrip, catapulting Internet stocks -- and the overall bourse -- to new heights.
The benchmark All Ordinaries index (.AORD - news) has risen 10 percent so far in calendar 1999. On Friday, it forged fresh trading and closing highs for a fourth straight day, rising some 10 points to 3,104.4 and ending at 3099.8.
''If they run on Wall Street, they'll run over here,'' said Joseph Pagliaro, client adviser at Brisbane-based Wilson HTM.
''Our stocks are a lot smaller and they're better value because stocks in the States have run so hard,'' he said.
Australian-listed stocks providing exposure range from blue chips with online operations to pure Internet plays to tiny start-ups tapping the bourse as a source of venture capital.
''In Australia alone, you can probably see 10 deals in the next three months,'' Marzbani said, adding they would be under A$40 million (US$25 million) each -- some below A$20 million.
''It's a gold rush.''
To wit, some 15 tiny speculative miners are converting from digging holes to staking their claim in cyberspace.
Walhalla Mining is seeking a name change to Walhalla.com as well as shareholder approval of its planned purchase of Kidz.net which filters unsuitable Web sites.
Suspended pending a meeting in three weeks, Walhalla ended at 39 cents on February 23. It finished at four cents on January 4.
Market heavyweights providing exposure include:
-- Telstra Corp Ltd and Cable & Wireless Optus , telcos which are both Internet providers.
-- Commonwealth Bank of Australia Ltd (CBA) with its online broking business.
-- Media tycoon Kerry Packer's Publishing & Broadcasting Ltd , mulling a float of its PBL Online unit, this week renamed ecorp.
''A lot of the more established companies are starting to pursue the Internet more aggressively,'' said Bill Bannister, industrial analyst at brokerage firm D & D Tolhurst.
''Those sorts of companies represent lower-risk opportunities than going directly into an Internet stock.''
Bluechip broker JB Were & Son has valued CBA's securities business, driven by online broking demand, at A$1.11 a share.
CBA's price-earnings ratio is 21 times, below U.S. online broker Charles Schwab's (SCH - news) 80 times.
While CBA, one of Australia's big four banks, has no plans to float its brokerage unit, media tycoon Kerry Packer's PBL has investors keenly awaiting a spin-off.
Analysts say the company will want to speed the float of some 20 percent of its online business in case Internet fever cools.
PBL stock has jumped 56 percent so far in 1999 and 33 percent since February 1, the day before it said it was considering a spin-off, to a recent peak of A$11.10 on Friday.
PBL Online accounts for up to A$1.50 of PBL's share price, analysts say, in buying fuelled by a belief that holding PBL shares would give access to Online scrip and by whispers of the
division's stellar values.
''It's at least A$1 billion,'' an analyst at an international securities house said of the valuation of PBL Online.
''On our numbers, we reckon it's closer to A$2 billion factored in at these sort of (share price) levels.''
PBL Online's main investment is its ninemsn venture with Microsoft (MSFT - news), which allows the parent to leverage its magazine and television news and lifestyle content.
Speculation of a spin-off puts PBL in the company of entertainment giant Walt Disney Co (DIS - news) and veteran publisher Time Warner Inc (TWX - news), pondering a float of its CNNfn network.
However PBL's price-earnings ratio of some 25 times is more attractive than Disney's 42 times, local analysts note.
Australia's most buoyant Internet float to date is online media group LibertyOne Ltd , which shot 150 percent ahead in its first month of trade to A$5.35, spurring a four-for-one stock split. It closed at A$1.10 on Thursday.
It posted a loss of A$341,000 and A$5.4 million in revenue for the 10 months to December 31.
Online broker E*Trade Australia Ltd , a licensee but not a unit of U.S.-based E*trade Group Inc (EGRP - news), has nearly quadrupled so far this year to an intraday high of A$11.55 on Thursday.
(A$=63 U.S. cents)
INTERNET STOCKS
* LibertyOne Ltd (A$185 mln) -- has Excite search engine in Asia Pacific, Internet alliance with telco AAPT Ltd and e-commerce plans.
* E*Trade Australia Ltd (A$386 mln) -- online broker
* Sausage Software (A$109 mln) -- has signed e-commerce tie-up with telco Telstra Corp
* Coms21 (A$30.3 mln) -- planning to float eBet Ltd gaming and wagering subsidiary
INTERNET COMPONENT
* Commonwealth Bank of Australia Ltd (A$25.6 bln) -- has online broking service
* Publishing & Broadcasting Ltd (A$5.58 bln) -- plans to float 20 percent of ecorp online arm.
* John Fairfax Holdings Ltd (A$3.3 bln) -- publisher has Internet sites leveraging off newspaper stable.
* Westfield Holdings (A$5.66 bln) -- shopping centre manager plans on-line retail centre.
OTHERS
* Davnet (A$87.4 mln) -- formerly Golden Hills mining. Back door listing of internet service provider
* Walhalla Mining Co (19.8 mln) -- plans to buy Kidz.met, a search engine for children. Stock suspended.
* Min-Tech 8 NL (A$10.4 mln) -- proposal to buy JFAX unified message technology. Stock suspended
* Richfield Resources (A$10.9 mln) -- backdoor listing vehicle for Sprint software house. Stock suspended.
* Western Minerals (A$4.0 mln) -- proposal to buy adult theme retail Web site.
*Mogul Mining (A$19.8 mln) -- proposal to buy wine retail Web site.
* Ramsgate Resources NL (A$8.2 mln) -- acquires e-commerce and Web design group for A$1 mln.
* Ocean Resources NL (A$1.7 mln) -- proposal to acquire Goalmappers, a lifestyle goals Internet site.
* Border Gold NL (A$9.2 mln) -- purchased HOTS e-commerce company.
* Chile Minera (A$4.9 mln) -- proposal to buy inernet service provider.
* Merritt Mining (A$14.9 mln) -- plans to buy smartcard and internet service provider technology.
* Triton Resources (1.9 mln) -- proposal to buy half of cross-media content service.
* Growth Technology (A$4.7 mln) -- proposal to buy smartcard and internet gateway groups. Stock suspended.
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