 |
 | |
 |  |
| We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level. |
The Internet Financial Connection August 13, 1998 Presented by Mark Johnson Editor of the IFC techstocks.com -------------------------------------------------------------- To Subscribe to this Newsletter: Send an email to <mailto:ifc-request@mLists.net> with "subscribe" in the message body. Please tell a friend about this newsletter :) -------------------------------------------------------------- This newsletter can be viewed at techstocks.com In This Issue: 1. The Decline in Tech Stocks Creates a Buying Opportunity! by Mark Johnson Editor IFC 2. Sepracor 3. Medical Manager 4. Galileo International 5. Interesting Articles On The Internet by Joe Dancy 6. Highlights on SI: MRI Technology meets Wall Street 7. Highlights on SI: by Tom Taulli 8. SI Discussion Boards: Media Perception is Changing by Dave Zgodzinski 9. Disclaimer ---------------------------------------------------------- 1. techstocks.com The Decline in Tech Stocks Creates a Buying Opportunity! by Mark Johnson Editor IFC What a market! Anyone who is heavily invested and has been following stocks on an hourly basis during the days when the stock market is open, may need a bottle of TUM's at their side. The Asian Crisis, economic worries, and overvaluation concerns for the stock market have been major reasons why stocks have not done very well. The smaller stocks in this stock market are the ones getting hammered. Many investors that have invested in them, keep shaking their heads in despair because of their performance. Larger cap stocks have been the ones least affected by the recent market action. The Wall Street Journal had a wonderful article on July 30, on page C1, (you can also read the article online but you must be a paying subscriber) about the performance of the overall stock market. The article suggests that in a universe of around 8,000 stocks, about 5,400 of those stocks (or stocks that have an average market capitalization of less than $250 million) ARE DOWN AN AVERAGE OF 43% FROM THEIR HIGHS! The stocks that were least affected were the larger cap stocks. Stocks that had a market cap in excess of $20 billion were only down about 12% from their highs. In the middle of the group, stocks that had a market cap of between $2 and $5 billion, were down an average of 20% from their highs. On July 30, the average stock on the New York Stock Exchange was down 24%. The major market averages are down from their highs but do not reflect the data or the overall action of stocks as the data above suggests. This is not rocket science, but the majority of stocks have been in a traditional bear market. Information has also been a factor for the recent declines in the overall market. If a bad piece of news was to appear in the financial media today, that information would be digested, analyzed and factored into the market almost instantaneously. Twenty years ago, it would have taken the markets a month or 2 to interpret it and act upon it. In 1997, an average of $17 billion flowed into equity mutual funds every month. Through June of this year, it is estimated that about $21 billion was flowing into those mutual funds each month. It is also estimated that over 50%+ of that money flowing into those mutual funds is contributed by individuals utilizing company sponsored 401(k) and other qualified retirement plans. Money will continue to pour into the market from these retirement plans, regardless of the global economic crisis. This will help fuel the stock market indexes to new highs by year end. Technology stocks have been under pressure along with the rest of the market. The Morgan Stanley HI Tech Index (An index of 35 High Tech Stocks), hit a high of 670 in mid July and recently hit a low of 560, which is a 15% correction off of its highs. That index has rebounded back up to 600 level. The NASDAQ Composite, which hit a high of 2228 and touched a low of around 1770 last week has moved up to 1825. The key technology Bellwethers such as Microsoft, Intel, Cisco and Dell, have not seen drastic declines. Intel has held their ground very well. They are the laggard of technology Bellwethers but as I have been suggesting for a few months now, I expect their shares to make a high by year end. As for technology stocks in general, now is as good of a time as any to buy them. We are by no means out of the woods. The sector will continue to be volatile because of the Asian Crisis (AKA "Asian Herpes" because their problems just won't go away). New lows could be made before making new highs. Right now there is a lot of fear in the market. Technology stocks have done alright up until their recent decline (the stocks in the indexes that is). Buying when the market is unstable or in doubt is the best time buy! There is a lot of cash on the sidelines waiting for somewhere to go. We will continue to see volatile markets and it is a traders market right now. When the advance comes again for the technology stocks, the money will come rushing in and the momentum players will push them higher. It is always good to be VERY cautious when purchasing technology stocks. Saving money for a rainy day and buying on steep declines (such as the one we just had) is good to do. While the market was correcting last week, the Internet stocks seemed to hold their ground. Many of them had already been corrected but while the overall market was declining, some Internet stocks were going up. The Internet stocks will continue to be very volatile along with the technology stocks. As the Internet changes the way may consumers work, communicate and purchase goods, it is here to stay! The fastest growing sector going forward will be the Internet. Many Internet stocks have been pushed up to absurd levels because people realize the Internet is the future. The largest gains for individual stocks will be in the Internet related area over the next several years. Steve Harmon of the Internet Stock Report isdex.com, expects "heavy roller coaster action" over the next few months in the market. He notes that it will be commonplace for tens of millions of people to buy a gift over the web this Christmas. "If you think last Christmas was e-tail heaven, this Christmas could be huge," he said in a recent report. The companies he feels will benefit this e-Christmas are AOL, Yahoo!, Amazon, Excite, Lycos, CDnow, ONSALE, Egghead.com and Cyberian Outpost Mark Johnson Editor IFC ----------------------------------------------------------------- 2. techstocks.com Scott Schuppie of Grace Equity Management and David Saks of Gruntal & Co., provide the following stock idea on Sepracor (SEPR 58). Below is the write up. Sepracor is not your typical drug making company. They will take drugs that have already been approved for the market and improve them. Most drugs have two isomers. One of the isomers carry the effect that the drug is trying to accomplish and the other isomer can sometimes carry a bad side effect in the human body. "Sepracor will avoid the major startup costs and pick up the research at pennies on the dollar that other drug companies have done," says Scott Schuppie of Grace Equity Management (whose firm returned 39% in 1997), "They essentially build a better mousetrap." Sepracor will basically strip off the bad isomer and leave on the good isomer. This changes the compound enough so that a new patent for the formulation may be obtained. They have over 20 patents that have been granted for method of use and 50 other pending patents. In late 1996, they took Seldane, stripped off the bad isomers and came up with Allegra. At the end of 1997, a deal was struck with Schering-Plough to reformulate a version of the world's top selling allergy treatment, Claritin. Sepracor has received a patent for R-fluoxetine, an improved version of Eli Lilly's top selling antidepressant Prozac. On July 21st, Sepracor announced a significant licensing agreement with Janssen Pharmaceutica, a wholly owned subsidiary of Johnson & Johnson, to develop a new version of Propulsid. Propulsid had worldwide sales in 1997 of over $1 billion and it is estimated that Sepracor's version could take that drug to over $2 billion in annual sales. Sepracor recently received an approval letter from the FDA for their version of Glaxo's Albuterol called Levalbuterol. Scott notes that Sepracor's pipeline of products is full and their future looks bright because they have agreements with many top drug makers. David Saks of Gruntal & Co also believes that Sepracor will continue to build more product opportunity relationships with drug companies. He estimates that they should have initial profits in 2000 with breakout earnings of $5.30 in 2001. His one year price target is $81 per share. There are threads that discuss SEPR here on SI. Subject 7382 ------------------------------------------------------------------ 3. techstocks.com Patrick Dalton of J.W. Burns & Company provides the following stock idea on Medical Manager (MMGR 23). Below is the write up. Medical Manager provides physician practice management software for physician groups. This software helps with certain aspects of the business such as billing, scheduling and accounting. There has been a trend in the industry for physicians to consolidate their practices and move into groups of physicians. Medical Manager will directly benefit from this trend. They have about a 25% share of the market. When someone files a lawsuit against a company, it can sometimes have a drastic effect on their shares. This is what happened with Medical Manager. On August 5th of this year, a class action lawsuit was filed against Medical Manager. Their shares immediately sank from $26 down to $20 on the news. According to the complaint, they sold licenses for non-Year 2000 compliant software programs that would not be functionally operable after December 31, 1999. Their latest software version, Medical Manager Version 9.0 was released in November 1997 and is Year 2000 compliant. Previous versions of their software were not Year 2000 compliant. Medical Manager in a statement said, "This lawsuit is without merit and we intend to vigorously defend against the suit." One person who is still very bullish on Medical Manager is Patrick Dalton of J.W. Burns & Company. He does not see the lawsuit as a big issue for the company. "Apparently some physicians who recently purchased the software are unhappy about the fact that they are required to pay for an upgrade in order to become year 2000 compliant." He argues, "At what point can people say they should no longer have to pay for an upgrade? Clearly physicians who purchased version 8.0 when it was originally released can't make that claim. Version 9.0 also offers many product features other than begin year 2000 compliant." Regardless of the outcome of the case, Pat is still very comfortable about the outlook for the company. He points to the release of their electronic data interchange (EDI) services. Currently, most physicians file medical claims to insurance companies manually. Medical Manager has implemented an EDI in their software. EDI allows physicians to save both time and money because claims can be filed electronically using this system. Pat mentions that the market for software upgrades to the EDI platform will generate substantial revenues going forward. Pat has been purchasing the shares of Medical Manager during the current weakness of their stock. He views it as a tremendous buying opportunity and believes they can grow earnings at 30% annually over the next 3 years. Medical Manager is expected to earn $0.75 this year and $1.00 in 1999. His target is the mid 30's within the next 12 months. There is a thread that discusses MMGR on SI. Subject 14427 --------------------------------------------------------------------- 4. techstocks.com Eric McKissack of Ariel Capital Management provides the following stock ideas on Galileo International (GLC 37 1/2). Below is the write up. Galileo International is a leading provider of electronic global distribution services for the travel industry, utilizing a computerized reservation system, primarily plane tickets for airlines. Their services include the ability to access schedule and fare information, book reservations and issue tickets. Eric McKissack of Ariel Capital Management finds the shares of Galileo very attractive. He particularly likes Galileo because, "they are a very profitable company that throws off a lot of free cash flow and is a leader in their field." Their competitors include, SABRE Group Holdings, Amadeus and Worldspan. Galileo and SABRE are the primary competitors in this industry and both have a very high market share. Questions have been raised about the bookings of reservations over the Internet and the effect that would have with Galileo. Eric modestly points out that even when flight reservations are made over the Internet, a computerized reservation system must be used (unless the customer books directly with the airline) in order to provide flight and scheduling information. Galileo has developed relationships with many of the emerging players in the Internet area. "There are high barriers to enter and develop a computerized reservation system... Galileo has developed an intricate computer reservation system has created and the key relationships that they have with the airline carriers," says Eric. United Air Lines and KLM own 32% and 10% (respectively) of Galileo. He estimates Galileo will earn $1.85 in 1998 and $2.14 in 1999. Eric views the recent pullback in their stock as a very attractive entry point. He thinks their shares can hit the high 40's sometime over the next year and the low 60's looking out longer term. ----------------------------------------------------------------- 5. techstocks.com Joe Dancy of The Lone Star Growth Investor members.aol.com provides the following links to Interesting Articles On The Internet. These articles were from a daily worldwide search of over 150 newspapers and magazines. Subscriptions to his newsletter are FREE. members.aol.com COMPUTERS, THE INTERNET & INTERNET COMMERCE Internet day trading allows individuals to stay home, plug in, and play the market. nypostonline.com Knowing when to get out of a position is the key to turning a quick profit for day traders. nypostonline.com Saboteurs plant fake documents on the web to manipulate stocks chicagotribune.com MARKETS Impeachment hearings would be a horrible turn of events for both the stock and bond markets according to some. But even worse for investors could be the opportunistic moves that foreign governments, like Iraq, might make if the current political scandal accelerates. nypostonline.com If the economy is indeed weakening, what should a small investor do? washingtonpost.com With jitters in the stock market and suspense building over the investigation into the Monica Lewinsky case, memories are stirring on Wall Street of the bad old days of Watergate. globe.com The prices of many individual small-cap stocks appear irresistible. washingtonpost.com Three views from the stock market's crystal ball mercurycenter.com As the Dow Jones industrial average soared to record highs throughout most of the first half of the year, investors understandably forgot the sharp downturn stocks suffered in October. For active investors, buying on dips was a smart strategy then. But is it smart now? chicagotribune.com ASIA, JAPAN & RUSSIA The Japanese yen and other Asian currencies weakened amid worsening economic news from China and Hong Kong and growing skepticism over Japan's efforts to stimulate its economy. washingtonpost.com Japanese voters and stock markets have set low expectations for new Prime Minister Keizo Obuchi. And in his maiden speech before parliament he proved unable to surpass them. mercurycenter.com In fact, many Americans have only begun to feel its effects and Asia's governments, the International Monetary Fund and the Clinton administration are still struggling to find a cure for the region's economic ills. Until Asian economy recovers, U.S. market may be woozy freep.com ECONOMIC Talk about a morality tale turned upside down: Free-spending Americans are the economic envy of the world, while the Japanese, those industrious savers, are swamped by economic troubles detnews.com Figures released by the Commerce Department show that, during June, U.S. consumers shelled out more money than ever for cars, household appliances and a host of other goods and services -- and personal consumption accounts for two-thirds of the U.S. economy. washingtonpost.com Seven weeks after the United States and Japan launched a surprise rescue of the yen, the Japanese currency yesterday fell close to its eight-year low, reflecting growing doubts among investors about Tokyo's ability to overcome its economic woes. washingtonpost.com While the economy is in good shape, the recent stock market correction has analysts talking about the big "R" word: recession. dallasnews.com SEMICONDUCTORS Global chip sales hit US$9.84 billion (S$17.1 billion) in June, down 2.2 percent from May and 14.1 per cent from June last year as the industry continued to suffer from the Asian crisis. straitstimes.asia1.com Despite a continued glut of memory devices on the global market, the Semiconductor Industry Association is maintaining its growth predictions for the chip industry as a whole. techweb.com ----------------------------------------------------------------------- 6. techstocks.com James L. Fleckenstein is an active participant on the Fonar - Where is it going in '98? thread here on SI. James provides the following commentary on Fonar (FONR 1 3/4). Below is his write up. MRI Technology meets Wall Street By James L. Fleckenstein, M.D. "Wobbling spins are the basis of the most advanced medical imaging tools available for patients today: magnetic resonance imaging (MRI). From a quality viewpoint, MRI generally outperforms all other diagnostic imaging techniques. It is also among the most expensive and frequently employed tests in medicine. As we all know, where there is money being spent, there is money to be made. Assigning value to evolving medical devices, however, can make even a savvy investor dizzy. MRI = More Radiological Income In an era of falling medical reimbursements, is investing in Radiology a smart place for smart money? In which company should one invest that can best capitalize on the increasing reliance of doctors on diagnostic imaging tests? Those that are the bluest of the blue chip MRI companies, right? I have no idea. I am simply a radiologist who spends his day amongst the spinning protons that make up images of patients' brains and spines. So it was with trepidation that I accepted the offer of the Silicon Investor (SI) Newsletter to write an article about FONAR. But the story of FONAR is an interesting one to tell because it is rife with archetypes and allegory and images of mice and science giants. It also tinkers with the ages-old question of how to build a better mousetrap. At the risk of clashing metaphors, this is in part a re-telling of David and Goliath and of the Phoenix arising amid the ashes. That bird roosts in Melville, New York, and if you listen very carefully, you can hear the wings rustling under the cover a huge new manufacturing facility, gearing up to catch the worm and Wall street by surprise. At least that's the plan.... The origins of MRI and FONAR This is no regular company. It was founded and is still reined by a physician, Raymond Damadian, M.D., a man whose impressive accomplishments include participating in the think-tank that wielded from that branch of physics known as nuclear magnetic resonance the immensely powerful medical imaging technique, MRI. For his early MR work studying cancer in mice, Dr. Damadian was a recipient of the National Medal of Technology from President Reagan, an honor he shared with Dr. Paul Lauterbur. FONAR Press Releases state that ADr. Damadian's pioneer patent in cancer detection is the world's first patent in MRI. Today there are over 700 patents at the U.S. Patent Office regarding MRIs - all filed behind Dr. Damadian's "Pioneer Patent." In fairness, the validity of the priority of this claim has been contested, sometimes bitterly. Those battles smack more of Napoleonic warring than investor issues. Recent SI posts from knowledgeable, but diametrically opposed historians of these issues are available: Message 5371034 Message 5435594 A minor sticking point is image: This issue begins with the fact that AFONAR is named after an antiquated technique that no company ever uses. However, AField fOcussed Nuclear mAgnetic Resonance was a technique used to make the earliest MRIs of the human body. Now FONAR, like all MRI vendors, uses MRI gradient technology to make MRI pictures. This technology was the product of non-Fonarian' work; credit is usually given to Dr. Damadian's archrival, Dr. Paul Lauterbur. The issue of who gets credit for what is at the heart of this story because scientific issues and egoistic forays notwithstanding, the US judicial system has staunchly supported FONAR's claims of priority and this has revitalized FONAR, particularly in the last year. General Electric (GE) gets FONAR-ed When I finally got my medical school bills paid off, and I had a few dollars left over, I thought I would make a little money by investing in MRI. To do this, I guessed, I should just buy stock in General Electric (GE), since for a long time GE more or less owned the MRI marketplace (when I was shopping for MRIs in 1993, a bragging GE salesman informed me that GE just sold their 1000th MRI device). Somebody pointed out that the MRI portion of GE represents a zillionth of the overall revenue of the company and no matter how well MRIs sold for GE, activity of MRI sales would never have a direct bearing on the GE stock price. I figure the same must be true for the other biggies in the industry, Siemens, Toshiba, Philips, and Hitachi. I wondered, then how does one place a bet on MRI technology? Where is there a pure MRI play? The answer to that question came from investigating the company that claims to have invented MRI: FONAR. In 1995, when I | ||||||||||||
|
| Home | Hot | SubjectMarks | PeopleMarks | Keepers | Settings |
| Terms Of Use | Contact Us | Copyright/IP Policy | Privacy Policy | About Us | FAQ | Advertise on SI |
| © 2025 Knight Sac Media. Data provided by Twelve Data, Alpha Vantage, and CityFALCON News |