This Just In - in his weekly Net report, BancBoston's Keith Benjamin still promotes AMZN, AOL, CNET, LCOS among others. Enjoy!
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06:35am EDT 23-Apr-99 BancBoston Robertson Stephens (Benjamin, Keith 415-693-3
KBWK: The Web Report - Volume 2, Issue #16 (Page 1 of 2)
BANCBOSTON ROBERTSON STEPHENS
Keith E. Benjamin, CFA - 415-693-3285
Keith@rsco.com
Unsubscribe to: rsch_webmaster@rsco.com
April 23, 1999
The Web Report -- Volume 2, Issue #16
This week, the NETDEX index closed up 1.2% from last week at 1,056.67. For
comparison, the NASDAQ ended the week up 1.6% from last week.
BACK TO THE WEB -- While a number of companies reported this week, we want to
focus on Lycos, which is not due to report until May, as its quarter ends in
April.
LCOS: Lycos appears to be moving up the ranks in terms of traffic, according
to the latest Media Metrix results. In March, Lycos ranked #3 overall with a
reach of 51.8%, or 31.9 million unique users, behind AOL with 69.1% reach, or
42.6 million unique users and the Microsoft Network with 51.9% reach, or 32
million users, and ahead of Yahoo! with 50.8% reach, or 31.3 million unique
users. These numbers reflect the combined properties of each respective
company, but do not yet reflect Yahoo!'s pending acquisitions of GeoCities and
Broadcast.com. As such, our point is not that Lycos is really larger, but that
the stock does not appear to reflect its relatively large size and impressive
growth characteristics. In fact, we expect confusion regarding the proposed
merger continues to distract investors from the increasing value of the company
on its own, as a driver in the combination, or as an acquisition candidate if
the deal is not consummated. We expect Lycos will see its stock rise one way
or another by May when its reports and when we expect the merger proxy to be
filed allowing the companies to talk about the benefits of the merger.
CNET: CNET reported Q1 revenues of $19.6 million and EPS of $0.09, above our
estimates of $17.0 million and $0.03. We believe the underlying franchise
remains strong, with network page views up 16% to an average of 9.5 million
page views per day in Q1 from 8.2 million in Q4. CNET generated over $90
million in sales for the participating merchants in its Merchant Program. The
two sites generated over 104,000 sales leads per day, up from 90,000 leads per
day in December. We see considerable revenue upside from CNET's ability to
aggregate computer/technology buyers and link them to sellers, and believe we
will able to raise estimates going forward even further as the lead generation
business accelerates. We believe the stock is just beginning to reflect the
value of this currently profitable model.
E-Tailing Update -- Lauren Cooks Levitan 415-693-3309, lauren@rsco.com
Amazon - Music Goes Digital - Amazon made a splash in the move to digitally
download music this week by featuring two tracks free from the soon to be
released Mirrorball album by popular artist Sarah McLaughlin. Through links on
Amazon's homepage and Music store, shoppers can download Amazon's co-branded
media player and the two tracks free of charge. We found the downloading
experience incredibly easy and the music quality terrific. We believe a
significant percentage of music sales could move online once the major record
labels agree on digital download standards. While we have viewed CDnow as a
potential beneficiary of a channel shift to digital download, we believe
Amazon's brand and critical mass of customers could prove overwhelming for
second-tier music e-tailers. We believe Amazon's vast customer base and strong
brand make the company uniquely capable of attracting other high profile tests.
We suspect news of the promotion drove nice traffic increases as well as sales
for Sarah McLaughlin and her record label Arista. As of Thursday, Amazon's top
selling music title was Mirrorball (on an advance order basis).
Drugstore.com Gets Jump Start from Amazon -- Association with Amazon can be
powerful. After investing in Drugstore.com, Amazon just started promoting
Drugstore.com, which posted impressive usage statistics for its first full
month in business. According to Media Metrix, Drugstore's reach was 1.1% with
687,000 unique visitors in the month of March. This places Drugstore.com in
the top 50 shopping sites, well ahead of many e-tailers with longer operating
histories and significant marketing budgets. In our view, this just begins to
demonstrate that the Amazon brand is more valuable than most online and offline
advertising programs. We wonder how quickly Amazon's new auction business can
reach critical mass, based on this experience.
Online Woes Plaguing Real World Managers - Borders' CEO, Philip Pfeffer,
abruptly resigned this week after just six months with the company. While no
specific reasons were given for his departure, investor speculation focused on
a string of disappointments including disappointing Q4 results, but more
importantly, lack of significant progress in addressing online competition.
Borders, a former Wall Street darling, has yet to build much of a presence
online with only $5 million in online sales last year. While we have observed
a dramatic shift in the tone of many retail management teams in terms of taking
the online channel far more seriously in recent months, it appears this shift
did not occur quickly enough at Borders to prevent a management change at the
top. |
