Publish date:

AOL Shows Portals the Door to the Basement

The merger with Time Warner is turning out to be bad for business.
Author:

Boy, does this market hate the portals. They are so out of favor that they languish day after day after day. Heck, I think

Portal Software

(PRSF)

-- which is not a portal -- is getting hurt because it has portal in its name.

It all started with

America Online's

(AOL)

buy of

Time Warner

(TWX)

, which is causing people each day to lose conviction in AOL as a business. Oh, you can say that's not true, but the one thing we know about this era is that stocks are a statement of confidence in the business plan and the execution.

It has infected

Yahoo!

(YHOO)

, which, even though it is doing quite well, can't get out of its own way.

Go

(GO) - Get Report

anyone? That's a hideous billion-dollar loser for

Disney

(DIS) - Get Report

. (Today Go felt a little like

Staples.com

(SPLS)

TheStreet Recommends

didn't it?)

And could this

Lycos

(LCOS)

be any uglier? (Yes.) It sliced right through the technical levels of support despite dangling its

Lycos Europe

offering -- a

Palm

(PALM)

portal? -- in front of all. Don't forget the carnage in all of the other Go derivatives, like

GoTo.com

(GOTO)

and

Go2Net

(GNET)

.

We haven't lost heart in these names. We still own Lycos and Yahoo! and AOL. We think the problems won't go away until AOL makes it clear that this strategy will allow it to grow faster than it would alone. And that is still not clear yet.

Because it isn't, we didn't add into the weakness today. In fact we discussed throwing the maiden into the volcano, which means throwing some of the positions away to please the gods of trading.

Maybe the fact that we didn't throw the maiden away bodes poorly for tomorrow. I know that a symbolic throw-in doesn't cut it.

Look out volcano, we may have to pay you a visit tomorrow.

Random musings

: Don't forget to tune into my chat at 5 tonight on America Online. No questions turned back, except, of course, about extremely small-cap stocks that have no place in the chat!

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Portal Software, Lycos, Yahoo! and America Online. 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

jjcletters@thestreet.com.