Street Life
Wednesday, June 2, 1999, 7:00 p.m.
'Old' Net Stocks Recover; Newbies Falter
By Nelson Schwartz
Not everyone has given up on Net stocks.
After being down sharply for most of Wednesday,
buyers rushed back into some of the biggest
tech and Net names, helping the NASDAQ
finish up 20.38, at 2432.41. The Dow
edged down 18.37, to 10577.89, while the
S&P 500 was barely changed, rising .55,
to 1294.81. Here's what we've been following:
SIZE MATTERS.... When it comes to Net
stocks, bigger is definitely better. While
well-known companies like Yahoo and Amazon
managed to finish the day with respectable
gains, the pain in smaller Net stocks was
unabated. Yahoo, which had been as low as
$130, jumped 4 5/16, to $142 1/2, while
Amazon rose 6 5/16, to $112 1/8, and eBay
gained 2 5/16, to $168 13/16. The story
was different for stocks like iVillage,
off 2 1/8, to $43 1/8, and Priceline,
down 6 17/32, to $92 29/32. TheStreet.com
was another loser, falling 2 7/8, to
$30 1/4. (Sorry, Cramu & Co.)
THE REAL LOSERS.... As bad as the recent
drops have been, the real story is how
poorly some fresh IPOs have performed.
After going public at $18 and immediately
rising to $25, barnesandnoble.com is now
trading at $17 3/16. ZipLink, which went
public at $14, is at $12, and Juno is
down from $13 to $10 3/4. Meanwhile,
DLJ Direct is rapidly heading south.
It went public at $20, got as high as
$45, but has been falling since, dropping
5 1/8, to $33 5/8, on Wednesday. I have a
feeling a lot of individual investors
bought these things after the IPO,
expecting another eBay or Amazon. It
hasn't worked out that way but you can't
say you weren't warned. (See Loose Change.)
WHY YOU SHOULDN'T WORRY TOO MUCH.... I'm
not saying the drop in Net stocks isn't
significant--it is. But I wouldn't panic
if other tech names, like Microsoft, Intel,
or Cisco, remain weak. Summer is often a
tough time for tech and it looks like 1999
may be no different. (Just look at August
1998, August 1997, and especially July 1996
if you don't believe me). Anyway, if the
trend continues I'd look for buying
opportunities in late August. For now,
it's safer to just stand back.
Loose Change
Expect shares of Office Depot to be strong
Thursday. It's joining the S&P 500....
Here's why you shouldn't count your mergers
before they hatch: After intense speculation,
Texaco called off merger talks with Chevron.
You know the investment bankers who were
working on that deal are bummed over that....
I know this is really annoying but I can't
help it: I told you so. On May 5, I wrote
in Street Life that "I am convinced a big
plunge (in Net stocks) will come ... soon."
I got a lot of angry e-mail in response but
I hope someone out there listened....
Monsanto shares have been pounded in recent
months but not everyone is throwing in the
towel. On Wednesday, Salomon Smith Barney
reiterated its buy rating on the stock, and
gave MTC a price target of $55.... Is Bob
Seger's "Night Moves" one of the greatest
songs of all time or what? Remember that great
'60s tune "Eve of Destruction"? Whatever
happened to angry protest songs like that?
Talk Back to Street Life....
Why let Serwer, Amy, and Nelman have all the fun?!
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