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Internet Stocks

Internet Stocks. Group 5 Michael Clamors Michael Nixon. Corporate Disclaimer.

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Internet Stocks

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  1. Internet Stocks • Group 5 • Michael Clamors • Michael Nixon

  2. Corporate Disclaimer • Certain statements in this presentation are forward-looking statements. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results could differ materially from the company's current expectations. Factors that could cause or contribute to such differences include, but are not limited to: the impact on the Company of economic and political uncertainties and weaknesses in various regions of the world; changes in the competitive landscape; a shift in demand for products such as ours; unknown factors affecting the third parties with which we have formed business alliances; timely availability and customer acceptance of our new and existing products, and other factors and risks • The authors assume no obligation to update information concerning its expectations.

  3. Inputs • 2000 presentation • Research • Financial magazines • Financial websites • Corporate websites • Interview • Eric Houser • A.G. Edwards • Stockbroker

  4. What is an Internet Stock? • Company that utilizes the Internet as a vehicle for earning revenues

  5. What we thought...

  6. What we expected...

  7. What actually happened...

  8. What is an Internet Stock? • Three main categories • Infrastructure • Service providers • Content providers

  9. Infrastructure Providers • Provide the hardware that the internet relies on to operate • Earnings growth tied to growth in demand (usage) of the internet • Examples: Cisco, Lucent, Sun Microsystems, Check Point Software

  10. Service Providers • Can provide internet service (ISPs), applications service (ASPs), or other services online. • Earnings generated by fees generated by usage, advertising, click-through

  11. Service Providers • ASP examples: Interliant, USinternetworking • Top US ISPs by Subscribers Q3 2001 • AOL (24%) • MSN (6.3%) • United Online (5.5%) • Earthlink (4.4%) • @Home (3.7%) • Source: ISP-planet.com/research/rankings/usa.html; Author: P. Fusco, Nov. 2, 2001

  12. Content Providers • Provide information, entertainment, products through the internet • Earnings made by usage fees, advertising fees, click-throughs • Examples: Yahoo, Amazon.com

  13. Analysis of 2000 presentation • Last year’s group forecasted: • Consolidation of companies needed to succeed and become profitable. • Infrastructure players need to provide services outside of the internet. • Diversify so that they are not solely dependent on the success of the internet. • Their case studies: Amazon.com, Priceline, Cisco

  14. Analysis of 2000 presentation • Amazon.com in the last year • Diversified • “Amazon Credit Account -- a virtual, cardless credit “card” -- for use when shopping at Amazon.com” • Increased “stores”: magazines, CDs, auctions • Source: Amazon.com Press Release Nov. 2, 2001, Oct. 30, 2001; www.custom.marketwatch.com

  15. Analysis of 2000 presentation • Priceline.com in the last year • Consolidated PricelineMortgage • Expanded relationship with Visa to increase online security • added long distance calling services • added European hotel reservation services • Source: Oct. 29 2001 Company Press Release www.custom.marketwatch.com Oct. 16, 2001 Company Press Release www.custom.marketwatch.com

  16. Analysis of 2000 presentation • Cisco in the last year: • Acquired 20 companies between ‘99 and ‘01 • Operations Reorganization • Biggest structural change since 1997

  17. Analysis of 2000 presentation • Was last year’s group findings correct? • yes and no. • The companies seem to have diversified and changed. However, the majority are still not making money--still struggling to survive.

  18. Company studies • Check Point Software • eBAY • USInternetworking

  19. COMPANY OVERVIEWCheckPoint Software Technologies is the worldwide leader in securing the Internet. The company's Secure Virtual Network (SVN) architecture provides the infrastructure that enables secure and reliable Internet communications. SVN secures business-to-business (B2B) communications between networks, systems, applications and users across the Internet, Intranets and extranets. • -Source: www.checkpoint.com Nov. 4, 2001

  20. What Checkpoint Does... Provides Secure Virtual Network (SVN) for users to help protect sensitive information while transferring over the internet. (SVN) Writes and sells secure programs and firewalls for corporations

  21. What Checkpoint Does... As of October 2001, the company has more than 86,000 registered customers with over 232,000 installations worldwide and 108,000 networks worldwide Source: http://www.checkpoint.com/corporate/corporate.html

  22. NASDAQ stock Source: http://www.BigCharts.com

  23. Is Checkpoint Making $ ? • Yes... • Anticipated 5% EPS growth in ‘02 • Anticipated 36% revenue growth in ‘02 Text Source: http://biz.yahoo.com/z/a/c/chkp.html Chart Source: http://www.checkpoint.com/corporate/financial_info.html

  24. COMPANY OVERVIEW • eBay is the world's online marketplace(tm). Founded in 1995, eBay created a powerful platform for the sale of goods and services by a passionate community of individuals and businesses. On any given day, there are millions of items across thousands of categories for sale on eBay, as well as on Half.com, eBay's site dedicated to fixed price trading. eBay enables trade on a local, national and international basis with customized sites in markets around the world. • Source: www.ebay.com

  25. Source: http://www.BigCharts.com

  26. Anticipated 57% EPS growth in ‘02 • Anticipated 42% revenue growth in ‘02 • Competitors (yahoo auctions, amazon.com, direct marketing websites) entering into the picture. • Solid growth trend that should follow internet usage Source: http://biz.yahoo.com/z/a/e/ebay.html

  27. COMPANY OVERVIEW • leading Application Service Provider, USi takes full responsibility for delivering the latest enterprise applications and e-commerce solutions as a secure, reliable, and scalable service to its Clients. Offered for a flat monthly fee, Usi’s iMAP Solutions seamlessly integrate the hardware and software, networking, security, and round-the-clock client care, and are backed up by the highest service level guarantees in the industry. • Source www.usi.net

  28. Strategic Partners • USi has established ground-breaking partnerships with market share leaders such as Ariba, Lawson, PeopleSoft, Siebel Systems, BroadVision, Plumtree, Microsoft, and Oracle. These relationships enable clients to obtain premier packaged software functionality without the burden of ownership as an integral component of an end-to-end outsourced business solution. • Source www.usi.net

  29. Source: http://www.BigCharts.com

  30. Source: http://biz.yahoo.com/z/a/c/usix.html

  31. Source: http://biz.yahoo.com/z/a/c/usix.html • Anticipated loss of $1.18 per share in ‘02 (5% growth) • Does not appear to be turning profit in the next 2-3 years • Stock price reflects this, shedding 99.7% of its value over the last 18 months

  32. Summary of companies • Checkpoint • profitable, growing • As online commerce increases, secure transactions increase, revenues increase • eBay • history of profitability • strong growth forecasts (tied to growth of internet and online commerce)

  33. Summary of companies • USInternetworking • Not profitable • Stock price weak • Losses mounting • Future uncertain?

  34. Investing in Internet Stocks • Do you feel lucky?

  35. Investing in Internet Stocks • Looking for a way to commemorate the great dotcom disasters? Head over to eBay, where more than a few burned investors are trying to recoup some of their losses by selling the canceled stock certificates of an assortment of defunct dotcoms like eToys and Pets .com. Though some certificates have reportedly gone for more than $500, even this market appears to be crashing, with prices topping out at $200 or less. • Source: David Futrelle; Money, New York; Oct 2001; Vol. 30, Iss. 10; pg. 160

  36. Technology IPOs Source: www.nasdaqnews.com

  37. Internet Stock Index (ISDEX) • Index made of 50 stocks representing $396 billion in market capitalization • Only 9 profitable companies! • AOL, Check Pt, eBay, Hotel Reservations Ntwk, Internet Sec. Sys., Juniper, Netegrity, RSA, Ulticom Source: Wall Street Research Net http://www.wsrn.com/apps/ISDEX/

  38. ISDEX Chart 3 year Source: Wall Street Research Net http://www.wsrn.com/apps/ISDEX/

  39. ISDEX Chart 6 month Source: Wall Street Research Net http://www.wsrn.com/apps/ISDEX/

  40. How to select internet stocks Five criteria for selecting internet stocks company with a major portion of business comes from the growth of the internet company provides a unique product with a major benefit to customers company serves a huge mass market management has the confidence of investors stock has strong positive momentum Source: http://www.icabot.com/stockpickingcriteria.html

  41. Investing in Internet Stocks • ...internet stocks have a lot to prove. They need to consistently make money before they can be considered anything other than a gamble. There are a few viable internet companies out there, such as EBAY. However, the fact that a company is internet related is not a reason in and of itself to invest in the stock. If the company has a viable business strategy that happens to utilize the internet, then so be it. Source-A.G. Edwards Stock Broker

  42. What is the future of internet stocks? • A lot more bankruptcies and a fair amount of consolidation. The decent companies will be bought (probably by well established brick and mortar companies with excess cash) and the good ones will survive. All the others will go the way of the dinosaur. Source: A.G. Edwards Stockbroker

  43. Conclusions • Companies have stabilized • Fewer IPOs • VC funding scarce • Invest smart

  44. Questions?

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