floydie would love this "The Oink 13" dug it up while looking into KANA
JONATHAN LANSNER
THE O.C. TWIST // The Oink.13, e-investing by dice roll
JONATHAN LANSNER:The Orange County Register
02/14/1999
The Orange County Register
MORNING
Page k01
They are a baker's dozen of hidden electronic dreams nestled in your own
back yard.
All 13 have the signposts that make typical investors skittish. Unstable
pasts, if any at all. Volatile share prices. And little eyeballing from Wall
Street, or in some cases, not even from regulators.
Yet all also have today's musk, a thirst for Internet dollars. Call them dice
rolls. Or just raw concepts. I nickname them the Orange Index of Net
Know-how. "The Oink 13," for short.
Now, that's no term of derision. Ponder that these 13 companies, on
average, saw their shares appreciate 168 percent this year to date. Total
market value? About $835 million _ roughly as much as local retailer
Quiksilver and homebuilder Standard Pacific. That's real bacon, yes? Are
you giggling at The Oink 13 anymore?
Face it, you're human. You're greedy. You're not reading this column to
advance your knowledge of social change. You're dying to find the next
Internet comet, like America Online or Yahoo. Heck, even a
Shopping.com, the Corona del Mar Internet retailer that was saved from
the financial brink by a surprise $220 million buyout from computer giant
Compaq.
So you eye The Oink 13, and think: "Which one?" As Alan Greenspan put it
_ yes, that Alan, our beloved Fed boss _ you'll pay the "lottery premium"
for a Net stock. That is, very high prices for a shot at the big killing.
But before you rush to place the down payment on this baker's dozen,
please note that this is a tattered crew. You'll need a scorecard to keep
track, as nine of the 13 have altered their names in the past year or so.
Certainly any company named Big Tex needs help. Kanakaris
Communications of Newport Beach seems a fine change. So does GTC
Telecom of Costa Mesa, formerly Bobernco.
But these ain't as chic as a "com" badge _ Alpha Micro of Santa Ana
becomes AlphaServ.com; CD-Rom Yearbook becomes 2TheMart.com of
Irvine; and Carv Industries of Huntington Beach briefly becomes Carv.com
before becoming PacificTradingPost.com.
To these, add two more equally predictable e-switches: Technology
Guardian of Fountain Valley to eSat and Innovus of Newport Beach to
eSynch.
Alas, these are names trading in low-profile places _ nine of the 13 trade
on the Bulletin Board, Wall Street's back alley. Did we mention that
Kanakaris is also listed on a German stock exchange?
Unfortunately for stomach linings, The Oink 13 lives up to the expected
nature of such lowbrow listings. In the past 52 weeks, the average Oink 13
stock traded between $1 and $15. Last week's average price was roughly
four times above the bottom BUT also roughly two-thirds below the peak.
Talk about a nightmarish spread.
In addition, new corporate identities don't overshadow dubious financial
histories. Six of the 13 don't seem to make routine filings with the Securities
and Exchange Commission. Of the other seven, four had auditors raise
doubts about their ability to remain a "going concern" _ ahem, in business.
It's a sea of losses. On average, Oink 13 members lost roughly 50 cents for
every sales dollar.
But bad numbers, or none at all, don't stop this group from tooting its horn.
Since Jan. 1, by my count, the 13 have issued at least 62 press releases _
that's almost two every three weeks per company, on average _ touting
every imaginable corporate nuance. Don't knock it. Who says sizzle doesn't
sell?
Kanakaris , a 3-cent share in '98, saw its shares hit a '99 high of $4 after a
Web-based publicity event. 2TheMart can tie this year's remarkable 543
percent gain to a press release stating its goal to start a Web auction house
like the popular eBay. And Internet Infinity, a Costa Mesa Web publisher,
saw its stock more than double after a 2-for-1 stock split announcement.
Now that's normal, except that its shares were trading for 70 cents _ yes,
70 cents _ before the news.
Besides buzz, strategy slices The Oink 13 into two groups: the rehabs and
the research.
The rehab group seeks the Internet as financial salvation, pumping life into
an older business format. There are track records here, just not pretty
ones.
These include veteran local tech firms like General Automation, a longtime
maker of business software from Irvine, and the old Alpha Micro, best
known as a computer repair shop which, while expanding its Internet
presence, is also trying to rid itself of its Net-based news service,
AlphaConnect. Add to this roster Smith Micro of Aliso Viejo, turning old
modem/fax software into Net products, and StarBase of Santa Ana,
converting business software for Net use.
Those in the research category are guessing at the next hot concept on the
Net. Guess is the key word. Track records? Hah!
GTC thinks it can grow from phone reseller to the Amazon.com for phone
cards. eSynch of Newport Beach, while cleaning up old financial scraps,
wants to convert computer downtime during downloads into an advertising
opportunity. The Net is a seller's dream for PacificTradingPost.com's
surfer-dude duds and skin-care products from Biozhem Cosmeceutical of
San Juan Capo. Kanakaris and Internet Infinity want to put others' work
on the Web. And eSat will hook you to the Web via satellite.
Most of this stuff is not much more than blueprints or works in progress.
Heck, 2TheMart _ valued by Wall Street at $265 million _ doesn't really
have offices.
Call it a mania. Call it a fad. Look carefully, though, at industry figures. The
Net had $8 billion in retail sales and $2 billion in advertising in 1998. That
business didn't exist two years ago. It ain't slowing soon.
Yes, at quick glance, The Oink 13 may seem prime, fattened candidates for
slaughter. Hey, America's chief worrywort Greenspan says most Internet
ventures will fail. But the keyword is most _ he didn't say all. That's the
lure.
You can think of Shopping.com, which went public at $9 in late '97 and
traded as low as $1 last year. Then think of its $18.75-a-share buyout. Or
you can think of Scoop, a briefly hot Santa Ana news Web site that
crashed into bankruptcy, wiping out shareholders.
The truth of Internet investing, The Oink 13 paradigm, is a pretty basic
philosophic question: Do you see a glass 90 percent empty, or one with 10
percent of hope?
Register business columnist Jonathan Lansner can be reached at (714)
953-7812 or by e-mail at lans@link.freedom.com.
CHART; Caption: CHART/LIST - LOCAL NET FIRMS GETTING FAT
WALL STREET RESULTS (SEE MICROFILM OR GRAPHICS FILE)
Copyright © 1999 Dow Jones & Compa |
