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July 7, 2000

Market Data as of 7/7/00, 12:07 PM ET:

o Dow Jones Industrial Average: 10,614.06 up 132.59, 1.26%

o Nasdaq Composite Index: 4,039.28 up 78.71, 1.99%

o S&P 500: 1,479.45 up 22.78, 1.56%

o TSC Internet: 821.32 down 3.98, -0.48%

o Russell 2000: 527.30 up 3.98, 0.76%

o 30-Year Treasury: 105 15/32 up 23/32, yield 5.851%

In Today's Bulletin:

o Wrong! Rear Echelon Revelations: FirstWorld: A Cautionary Tale
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Wrong! Rear Echelon Revelations: FirstWorld: A Cautionary Tale


James J. Cramer

7/7/00 7:50 AM ET We should have known that something was fishy with FirstWorld (FWIS) when its CEO dodged a series of softball questions from CNNfn's Tony Guida right after it came public in March of this year. I mean, who in heck keeps his bat on his shoulder for questions about a company's business plan or how fast or how big the company's market is? Yet there was former CEO Sheldon Ohringer ducking a couple of big fat hanging curve balls. "Well, I don't really want to talk too much about our business plan, but we're in a very large space," he told Guida when asked about what the company does. "We just did our IPO a few days ago, (I) probably shouldn't talk so much about the market."

Former CEO Ohringer resigned Thursday "to pursue other interests" after FirstWorld, a Web hoster, reported a stunning shortfall and its stock got pole-axed. Hmm, I guess something really good must have come up for Ohringer to move on. Good for him!

I know, this is just one more horrible blowup in a series of horrid blowups. But when a company isn't even two seasons old and it is an infrastructure play, one must ask, "Where can you hide?" FirstWorld had great partners, including


(ORCL) - Get Oracle Corporation Report



(CSCO) - Get Cisco Systems, Inc. Report



(AKAM) - Get Akamai Technologies, Inc. Report

. It had first-class investors, including


(MSFT) - Get Microsoft Corporation Report




. It had a strong business model, hosting for the underserved middle tier of sites. And it had a fast-growing Web integration and Internet connectivity business which accounted for more than two-thirds of the company's first-quarter revenue.

Now it has no CEO, is exiting the business that produced the lion's share of its revenue and can't seem to get its Web-hosting facility up to full capacity. How could have all of this happened so fast? Could we have detected it during its run to 35? Maybe. But so many people thought they had the next






on their hands that, well, how could you not?

To me, this one prompts still one more wholesale examination of the deals that came public right before the window slammed shut in April. This one snuck in and it snuck into peoples' portfolios. And it bit them on the hind parts.

We must avoid the FirstWorlds at all cost. They can kill your portfolio. Perhaps you should, today, look over any of the companies that you own that came public during the frenzied final days of the 1998 to 2000 bull market. There could be other stinkers lurking. FirstWorld's problems remind us that it is never too late to boot them.

James J. Cramer is manager of a hedge fund and co-founder of At time of publication, his fund was long Oracle, Cisco, Microsoft and Lucent. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at

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