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To: Sonny Blue who wrote (58431)	5/25/1999 3:20:00 PM
From: Don Westermeyer	Read Replies (1) \| Respond to of 164684

Soaring margin debt seen bad for Internet stocks Tuesday May 25, 11:24 am Eastern Time NEW YORK, May 25 (Reuters) - Soaring margin debt is likely to trigger a debacle in Internet stocks, Charles Biderman, chief executive of TrimTabs.com said Tuesday. ''New online investors are buying heavily on margin and it looks like they're buying Internet stocks,'' Biderman said. TrimTabs.com is a Santa Rosa, Calif.-based firm which collects information on mutual fund flows and other market data. ''When people borrow to buy (stocks) that's a very bad sign for the future.'' Biderman cited figures showing margin debt for customers of New York Stock Exchange (NYSE) member firms at $182 billion at the end of April, up from $156 billion at the end of March and $142 billion at the end of February. He said the nearly 30 percent increase over a two-month span was unprecedented. When investors buy stocks on margin they put up only 50 percent of the purchase price and borrow the rest from the brokerage firms. To maintain the position, they need 25 percent in cash, although many brokerages require a more conservative 35 percent. The wild price moves in Internet stocks, which can go up or down tens of dollars a day, have caused brokerages to stop allowing customers to buy some of these volatile stocks on margin or require clients to put up more cash. ''Either the market has to rise dramatically to make those loans good or in any down move there's tremendous selling pressure,'' Biderman said. He said in a decline that takes the market down 10 to 20 percent there would be plenty of stocks that fall 30 or 40 percent and investors who bought those stocks using margin could face forced liquidation in a panic environment. Biderman speculated that at least some money that used to go into stock mutual funds has been diverted to online trading as unsophisticated investors buy Internet stocks. He said figures compiled by TrimTabs, which includes estimates of mutual fund flows, shows a net $59 billion went into stock funds in the first 20 weeks of 1999, down from $100 billion in the first 20 weeks of 1998. ''You're going to have a major wipeout in Internet stocks,'' Biderman concluded.

To: Sonny Blue who wrote (58431)	5/25/1999 3:31:00 PM
From: Glenn D. Rudolph	Respond to of 164684

Barnesandnoble.com climbs 37 percent after IPO NEW YORK, May 25 (Reuters) - Shares of online book retailer barnesandnoble.com <BNBN.O>, one of the week's most closely watched initial public openings, climbed about 37 percent shortly after its market debut, a gain that paled compared with other Internet-related issues after their IPOs this year. The stock was trading on the Nasdaq at $24.63 early Tuesday afternoon after its IPO of 25 million shares at $18 each. Given the stratospheric gains of other hot deals, barnesandnoble.com's performance seemed like a return to the environment that existed before the craze for cyber-related stocks began, said Steve Lacey of the IPO Reporter. Indeed, the recent decline in Internet stocks may have taken some of the steam out of barnesandnoble.com's debut, analysts said. The American Stock Exchange's Internet Index <.IIX> was down 1.58 percent to 291.43 on Tuesday amid signs that investors were beginning to lose faith in the volatile sector. The Dow Jones Internet Indexes were also lower, with the Dow Jones Internet services index <.DJISVC> down 2.83 percent. More and more IPOs of late have met lukewarm receptions and many have lost a good chunk of their initial gains in aftermarket trade. "We are starting to see a differentiation between the growth companies and the dot-com add-ons," said Bryan Piskorowski, market analyst at Prudential Securities. "You are starting to see the supply and demand quotient even out." Barnesandnoble.com's offering, which raised $450 million, was expected to be the deal of the week, providing the best gauge the health of the IPO market. Analysts said investors would keep a close eye on its aftermarket performance. "I think it certainly brings into question the tremendous supply of IPOs in the pipeline and whether they are going to get done," Lacey said. Barnes & Noble <BKS.N>, which operates bricks-and-mortar bookstore chain, and Bertelsmann AG <BTGGg.F>, the German media company, will each hold a 41.1 percent stake in the company with the remainder held by investors. Expectations that the online book retailer will have to implement a strategy that incorporates more than books in a field dominated by Amazon.com Inc.<AMZN.O> may also explain the barnesandnoble.com's performance, said David Menlow of the IPO Financial Network in Millburn, N.J. "With the press coming out about price wars (between book retailers), the focus is going to be solidly on barnesandnoble.com to not just be another book site," Menlow said. Just last week, barnesandnoble.com and Borders Group's <BGP.N> Borders.com slashed prices on all books on the New York Times bestsellers list by up to 50 percent, matching price cuts announced earlier by Amazon.com. 859-1730)) REUTERS Rtr 14:15 05-25-99