Meet the Street: Musings of an Internet Veteran

For the outlook on the Internet, who better to talk to than the man behind internet.com?

A quarter-century veteran of the technology-publishing and trade-show business, Alan Meckler has spent the past few years as chairman and CEO of INT Media (INTM), operator of a small empire of Internet and information technology-focused Web sites, including the flagship internet.com.

Despite the recent obvious challenges faced by Internet content companies, advertising-supported businesses and small media businesses, INT Media has been able to keep going with a comfortable cash cushion, though its stock has dropped from a 52-week high of $10 to sub-$2 levels.

Meckler, who took the company public in 1999 when it was known as internet.com, took a few minutes last week to reflect on the recent past of the Internet, and its future.

TSC: What do you know now that you didn't know a year ago?

Meckler: Not a lot. I guess the biggest surprise was that our company would, from a stock-price perspective, be as affected as other Internet-related companies. I thought that while we would certainly be affected, we had such significant quality that the market would give us some wiggle room. But obviously not.

Alan Meckler Chairman and CEO, INT Media Group

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But what the year has shown me was that many of my theories were right on the mark, in terms of which direction survivability was going. And that was verticality and specialization. I think [that direction] even more so is going to be the hallmark of successful content sites.

TSC: Why did you think the market wouldn't be as tough as it was?

Meckler: Obviously, I knew we were going to contract in terms of revenues. ... I just felt that business-oriented content Web sites would be given, as I said, a little more wiggle room in judgment than some of the consumer-oriented and wild concepts that were out there.

Of course, now I think the pendulum has swung too far. But we're seeing a Darwinian evolution in which truly the survival of the fittest is taking place. And in 2002 I think a lot of the survivors will be seen as tremendously undervalued.

TSC: Has the culling of Internet content companies been completed?

Meckler: I would say it's about 90% done. Another quarter of weakness in the advertising market will take down a few more.

TSC: What's the outlook for online advertising?

Meckler: From our company's perspective ... we certainly hit bottom several months ago. So while it's not a hockey stick, it's up. I can remember in February, March of 2001 thinking perhaps the worst was over, and, really, it was only starting. But by June or July -- certainly by July -- the worst had passed for us. And now it's just a treading water situation.

And what I see for us, and for companies that might be similar to us who have their own verticals, is that there have been a lot of competing Web sites and trade magazines that have folded. And if you're in an area where there really is a robust business future -- which, certainly, with technology and Internet there is -- then it's only a matter of time. As you survive, those ad dollars will come back to you in greater levels than ever, when the advertising/marketing budgets are opened up.

TSC: So that's a quarter away?

Meckler: I don't think I'm smart enough to know which quarter ... but what I see happening in the press, and, of course, in the ad placements that we're getting, is that in certain areas -- 802.11 wireless technology, for example -- we're seeing a lot of advertising starting to take place. Larger campaigns. Just in general Internet infrastructure, I see good general advertising for servers.

TSC: What type of personal investments have you made in the public market?

Meckler: Because of my stake in INT Media, I chose for the most part to be in bonds, because I felt I had a big position in the market. Which I do. That turned out to be a pretty good investment...

I have been buying some distressed Internet companies, and I've been speculating in the 802.11 area.

TSC: Which companies?

Meckler: In Internet stocks, RealNetworks (RNWK). And CNet (CNET), when the prices go down. They're up a little higher now than they've been.

In the 802.11 area, a company called Gric Communications (GRIC), which is a wireless 802.11 provider, an ISP. And a company called Intersil (ISIL).

In the last 60 days, those are the companies I've been speculating in.

To me, 802.11 is the last stage of the Internet. I'm not going to suggest a bubble comes again, but I believe 802.11 has all the trappings of the Internet of '93, '94, '95.

TSC: As an investment, or as a business?

Meckler: Everything. I must say, I have selfish reasons, too. One, of course, I've bought some stocks. But two, we recently ran our first trade show in the area called 802.11 Planet.

Everything I've been reading gives me the feeling that the whole 802.11 area will be robust. And the way you'll see that is in both VC investments and IPOs in 2002. ... It's what I say is the last piece of the Internet. It's the last mile solution. I think it represents a tremendous threat to cable TV and a lot of other things, in terms of distribution of information.

TSC: In terms of cable modems?

Meckler: Exactly.

TSC: Looking at large-cap companies on the Internet such as AOL Time Warner (AOL) and Yahoo! (YHOO), what do you think they've done right? What advice would you give them?

Meckler: The brilliance of AOL, and why it has been insulated, comes from two things. One, it's an ISP, first and foremost, and the largest ISP, bar none. And then, of course, the brilliance of [Steve] Case and [Bob] Pittman figuring out in January of 2000 to take that huge value and to cement a powerful position by acquiring Time Warner. That has to be one of the more brilliant strategic timing investments of all time. ... All you've got to do is look at Yahoo! to see where they [Yahoo!] made a big mistake. ... They missed the boat.

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