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To: powershred who wrote (121635)	5/2/1999 12:47:00 PM
From: Ian@SI	Read Replies (1) \| Respond to of 176387

P/E s are almost always important; or at least the future promise, if not now; especially for tech stocks. Investors will pay for growth, preferably in current earnings, but sometimes even for the prospect of future E. FWIW, Ian.

To: powershred who wrote (121635)	5/2/1999 1:07:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 176387

<--OT-->Glamorous losers or looking good in red, huh? Prophets of Loss Downside May 03, 1999 Now there's empirical proof that the Internet economy is turning the world of business upside down. A recent study shows that unprofitable small-cap companies are likely to make investors more money than firms that record a profit. Howard Penney, small-cap strategist for Morgan Stanley Dean Witter, recently compared the performance of money-losing companies in the Russell 2000 with the stocks of companies making profits. The losers have collectively racked up 24 percent gains so far this year. The stocks of the profitable companies actually dropped a little more than a percentage point in the same period. The unprofitable winners were, of course, the Internet stocks. And while the returns of what we might call Penny's unofficial Unprofitable Index aren't quite up there with the returns of, say, the Internet Fund, 24 percent a quarter isn't too shabby--especially at a time when so many small caps are struggling to gain even a modicum of respect from trigger-happy investors. Penney intends the study as a wake-up call for money managers old-fashioned enough to actually demand profits from the companies they invest in. "There are a lot of people managing money today in small caps whose charters have them owning companies that are profitable and growing earnings," says Penney. "Unfortunately, in the first quarter the only performance in the Russell 2000 came in stocks that were losing money." (Penney also notes that the high-performing losers tended to be larger companies, with more than a billion and a half in market cap.) Penney isn't suggesting that money managers trade in their holdings in profitable small caps for a portfolio made up entirely of glamorously unprofitable Net stocks, and he takes heart in the recent broadening of the market. Nor does he think the money-losing companies can keep losing money forever. "Take a look at the reaction to Amazon saying it's going to be losing more money next year," he notes, pointing to the stock's sudden (if short-lived) swoon last week. "They're not going to be able to do that for two more quarters. People still believe that this company is going to be a lot bigger than it is today. But it is absolutely critical that ultimately they show profit." And that, perhaps, is the point. ......continued------> e450.upside.com (David Futrelle writes regularly on technology and culture for Newsday and the high-tech entertainment newsletter Digital Mogul. His work has also appeared in Salon, Feed, the Chicago Tribune, the Village Voice and the Los Angeles Times book review. He lives in Chicago.)