Net Stock Summit: Readers Speak Out

Setting the agenda for TSC's Net Stocks '99 Summit was relatively easy. We simply asked TSC readers. Based on their responses, gathered through email and through a tally of the voting results for our poll, we have a good idea of what interests you. Now when our Summit guests sit down at 5 p.m. EST Friday to talk Net, they'll be responding to your thoughts and concerns. Here's what the poll revealed when we tallied the votes Thursday.

Net Bubble? Not!

Are Net stocks mostly hot air, or are the prices they command sustainable? Nearly half -- 47% -- agreed with the statement: "Net stocks are a bubble."

But 53% of 1,960 respondents (as of Thursday morning) disagreed.

So, how do you get to the true value of a Net stock? Talk about the "hot button" issue.

One reader asked: "What is an appropriate price/revenue multiple for Amazon.com (AMZN) and should it be based on run-rate revenue or a forward-looking number?" Another wondered: "Why does a portal such as Yahoo! (YHOO) command a higher valuation than Amazon.com despite a smaller revenue base?"

And here is another: "If everyone is having trouble valuing Net stocks and says they are overvalued, then why is USA Networks' (USAI) takeover of Lycos (LCOS) a take-under?"

Portal Prowess

Portals are here to stay! At least that's what most poll respondents think. About 73% of 1,650 respondents disagreed with the statement: "Portal companies will become obsolete. " Readers wondered what impact Internet awareness will have on America Online (AOL). Indeed, as the technology morphs television, telephone and PC into a single appliance linked to the Web, how will portals evolve? How can we bank on the future earnings of companies we can't envision?

MP3 or Bust

Only 27% of 1,430 respondents agreed with the statement: "Technology like MP3 will wipe out record companies." But many readers wrote to say the statement was too extreme. While they believed the industry will be severely damaged by this new technology, which allows music to be transferred digitally over the Web for free, they didn't agree record companies would fold.

"The new technology WILL make serious dents in their business and crater stock prices over time, but the way you worded it, I cannot agree with the absolute," wrote George Selin.

No question, technology like MP3 will recreate the music industry. The real question for the Net Summit panel is who will benefit, and who will be sacrificed?

Bye-Bye, Big-Time Brokers

"Online brokers will kill off white-shoe Wall Street firms."

Even though this statement painted a rather extreme picture of the future, a full 38% of 1,674 voters agreed. Of course, that means 62% disagreed.

Many who disagreed wrote to say they concur with the spirit of the statement, but not the totality of it. "I don't think online [brokers] will kill them off, but they will make a hell of a change in their numbers," wrote one reader who wasn't comfortable without the Morgan Stanleys of the world.

This is especially interesting, given that our audience is in general clearly comfortable with using the Net. What about uninitiated stock investors? How long before they are seduced by the winsome Web? We know Merrill Lynch (MER) has felt the online broker pinch. Is time running out for the big guys? If so, how long before their high-cost culture is toast?

Amazon.com Profit Paucity

Only 27% of 1,914 respondents agree with the statement: "Amazon.com will never make a profit." That means 73% believe that the online bookseller will one day show a profit. The question is when, and of course, how? Does Amazon.com have the know-how to become the Wal-Mart (WMT) of the Internet, as some have suggested?

We'll talk about all this and more right here, Friday.

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