Jim Seymour was the guest on a Q&A on TheStreet.com's Message Boards Wednesday, Dec. 15. Seymour, a TSC columnist discussed the future of Microsoft, B2B and other tech-related queries. Here is the transcript of that event.
TSC Moderator Laura Poynter:
Jim is on the boards and answering your questions. Thanks for joining us.
Hi, Jim. Love your column on
and hope to see more. In the communications field over the next year what would be your picks for the top three performers?
Hello, everybody. Glad to be here. Interesting times these days in the market, eh? Thanks to everyone who's asked for more columns from me. My commitment to
is for one a week, but I usually hit about three a week --looks like *five* this week! Anyway, I'll write as many as I can.
Jim, I am currently long Webvan (WBVN:Nasdaq). What's your view on it? They are building one of the distribution centers here in Dallas.
I've written several times about Webvan on
, and to summarize, I think it's the most promising company in what's going to be a very big business. But they're a long way from making money, and while I think their business model is the RIGHT business model, it's also one that will take a long time to pay off.
Hi, Jim. One of your picks for 1999 was Broadcom (BRCM:Nasdaq), and in scanning the archives of your writings, I see your last mention of it was in a April 23 recap where you said: "Broadcom, one of two specialized chip-technology firms on the list ... has had a lousy year, after a spectacular run-up following its IPO last year. This year's performance is painful, but I think Broadcom is a mid-to-long-term winner, and I'm keeping it on the list ... though I have to swallow pretty hard to do so. I'd still like to see Broadcom acquired, and I'll bet shareholders would, too." With it's performance since then, I wonder what your position currently is on this fine company? Thanks in advance for your response.
Well, with BRCM up 5 times over its price when I recommended it, I feel pretty good about it. It sure was hard to hold during the first quarter, while it wallowed around. Since then, it's been great. And I suspect that BRCM holders are happy it WASN'T acquired!
Jim, enjoy your insights. What are your thoughts on IBM (IBM:NYSE)? Aren't they well positioned to benefit from the B2B theme?
Yep, IBM looks well positioned to benefit from the B2B boom ... but in fact, it won't grow nearly as fast as the hotter B2B dot-coms. B2B certainly helps IBM, but isn't, to my mind, a reason to *buy* IBM.
Jim, any thoughts on CheckFree (CKFR:Nasdaq)? I think internet billing/bill-paying will be a killer app and I think it is the type of application where network effects can give the leader a real edge. The stock has been on a tear lately. Do you see this market taking off, or as a shareholder do I have blinders on?
I agree, certainly, that online bill-paying -- and maybe even more, the other side of the transaction, online bill-*presentment,* to use the industry's ugly nonword! -- is big, and will get bigger.
The issue is that I think most people will "buy" bill-paying through a bank or a portal (for example, Yahoo! (YHOO:Nasdaq)), so the biz opportunities for companies like CKFR are to become a behind-the-scenes, OEM-like supplier. And given CKFR's miserable progress over the past several years, I don't have much confidence that they'll be a big winner here.
Hi, Jim. what do you think about Cobalt Networks (COBT:Nasdaq) and Winfield Capital (WCAP:Nasdaq)? Is COBT still a good investment after its huge IPO run-up?
COBT is richly priced, but it remains one of my favorites. Down around 110 today; the market's letting us back in.
Which stocks are your picks for 2000?
James, look for a list of "Stocks to Watch in 2000" from me next week on
Jim, do you see INTC (INTC:Nasdaq) as an emerging player in the non-PC market? In other words, is INTC successful yet in shedding its PC image? Right now, Texas Instruments (TXN:NYSE) sure seems to be the communications-chip leader. Will INTC ever dominate this market, too?
TXN is a *great* stock to hold now because of their position in the DSP business. But yes, INTC is breaking away from the "just-PCs" model, and in many ways is becoming a communications-chip maker. As I've written recently on
(look in the Archives), I'm high on INTC long term.
Jim, thanks for taking the time to chat with us. I, like you, am a holder of AT&T (T:NYSE) stock since April. This is a very frustrating stock to own this year. Do you think they are executing to their goals they have set out, and should I just put this away and look at it in a couple years? Thanks in advance.
Unless it dominates your portfolio, I'd hold on. You want to be around for the wireless-tracker issue next spring, and overall, I think T is gonna look a lot smarter this time next year than it does today. That's all valid if you're a buy-and-holder; if not, then I'd get out of it now, because it's not a smart stock for a trader to hold these days.
Jim--couldn't let the "Dell (DELL:Nasdaq) is an easy double" go by without a brief challenge. Don't you have to discount Dell's future margins substantially based on the competition from a) "thin" clients (for instance, Netpliance out of Austin, Texas), b) free or low cost PCs bundled with Internet access, c) set-top boxes (I would venture Dell is really worried about set-top boxes) and d) wireless PDAs? I view the latest revaluation of the box makers, and their failure to rebound, as due to a combination of these forces and skepticism as to whether they can keep their margins over the next 3 to 5 years.
Sure, Dell faces a lot of challenges. But you ignore how powerful they're gonna be in the server business in 2000. A year from now, that will be largely a Dell and Sun Microsystems (SUNW:Nasdaq) game, with Compaq (CPQ:NYSE) slipping back and IBM & HP hurting.
Jim, this is a repeat of an earlier post of mine: For 3 years I have been waiting for broadband-Internet plays to take off, but broadband seems to be slow coming out of the gate. It's surprising to me, because everyone I know who has gotten broadband access loves it and can't imagine going back to the old dial-in days. But I think that we need an impetus in the form of a killer broadband app to push the market forward faster. I thought video would be the killer app, but it doesn't seem to be (yet). My questions I would like to see you address: 1. What is your view of @Home's (ATHM:Nasdaq) growth in subscribers? It looks like they are just barely on target, having announced 1 million recently. Do you see exponential growth in subscribers for ATHM in the next couple years, or will it just keep plugging along? And what is your view of the future availability of DOCSIS cable modems? Will this help ATHM improve subscribers? 2. Do you see any good DSL plays? I am looking for a way to play DSL, but the RBOCs are not pure plays. Aware, as far as I can see, just makes its money off licensing ADSL, and is going to lose revenue if providers begin switching to a faster flavor of DSL in the future. Covad (COVD:Nasdaq) has just been languishing for the last year. 3. Any views about whether set top-box manufacturers like General Instrument (GIC:NYSE) or Scientific Atlanta (SFA:NYSE) will ever be players in Web browsing? Or is it more likely that another company with more of a computer brand name will try to take over this space? Thanks.
Ted, too much to answer in a chat session here, but watch my upcoming columns. I agree about the heat in broadband, but it's hard to play now. ATHM hit an important growth target with 1 million customers by the end of this year. DOCSIS is important, but we've seen so much nonsense about DOCSIS compatibility so far -- and we still don't see those DOCSIS modems on computer-store shelves -- so it's hard to see that being a big positive for ATHM right now. Else, I'm a big fan of the future of set-top boxes (despite how much I hate TODAY's set-toppers...), and we saw a nice deal sneak out today (see my column today), with Paul Allen buying maybe a million new $300 GIC boxes. But, I still don't see big share-price jumps coming there soon. And DSL may be even harder to play!
Jim, Internet Capital (ICGE:Nasdaq) and CMGI (CMGI:Nasdaq). Does ICGE have the management and $$$ to compete with CMGI? I am long ICGE.
First, they're not direct competitors. And while I don't think ICGE has anyone with Dave W's strength, their management is up to their task.
Mr. Seymour, just an update on Advanced Radio (ARTT: Nasdaq) and Aware (AWRE:Nasdaq), if you have the time. Currently have only small positions in each. (AWRE has been a lot of fun to trade over the last six months; ARTT has been like watching paint dry.)
All too brief, Guerry: I'm still long AWRE, but probably not for much longer. ARTT seems to me to have a bright future. But there are many better bets in the market these days.
Jim, Dell is up 2.1 today. Is this a Windows 2000-related gain or are money managers looking for techs that are not up a huge amount on the year. Do you think Dell is going to continue up?
I don't know what money managers are thinking right now, and I'm always reluctant to ascribe ANY market moves to a single influence. But I think in general that the Street is starting to recognize how under-priced Dell is, and how great a stock it will be over the next year. I wrote on
recently that I think Dell's going to be an easy double, and nothing I've seen since changes my mind.
Jim , So far the general impression is that Microsoft (MSFT:Nasdaq) is a consistent good performer mainly because of its monopoly in this market. Also looks like MSFT may not bail out of this antitrust thing easily. MSFT itself getting into the Linux market. Would it hurt or be a blessing for MSFT (or maybe take over Red Hat (RHAT:Nasdaq) or some such company)?
I think that for now, MSFT is going to stay as far away from Linux as it can. Follow it closely, yes, but buy or sell it -- no way. Maybe someday an acquisition would make sense, but now an acquisition would (a) be a slap at its own Windows 2000 server software and (b) be seen as a profoundly anticompetitive move, which would just stir up things in Washington. Why do either?
Jim, what's your take on Lucent (LU:NYSE) vs. Nortel (NT:NYSE)?
I like Lucent a lot better, as a long-term core position.(long LU)
Any thoughts on DSL provider Network Access Solutions (NASC:Nasdaq)? Are the DSL providers ultimately takeover candidates? Also, when will we hear AOL's (AOL:NYSE) broadband strategy? Thanks,
It would be smart for the RBOCs to start sopping up small DSL shops, but I don't see that happening yet. Longer-term, absolutely. Dunno when AOL's gonna show us their hole cards, but I think we see enough, in the outlines of it, to act now. I think AOL's a buy.
Jim. I really enjoy reading you. What do you think about Nokia (NOK:NYSE ADR)? Is the current fall in price justified? Have any fundamentals changed for the company due to the MSFT/Ericsson (ERICY:Nasdaq ADR) link-up? Is the stock a buy at it's current level?
I think Nokia's a buy.
Jim, can you give your opinion of the stocks that were drafted by Matt and Jim in the B2B draft?
I think they did a GREAT job of finding the right B2B issues. Watch for my columns next week on "Stocks To Watch In 2000" to see just *how* right I think they were/are!
Jim, feelings on Global Crossing (GBLX:Nasdaq)? Are you still a fan of theirs or has your opinion changed? Thanks. (no position in GBLX)
Did you see my mention today of Global Crossing, and Leo Hindery's role at GlobalCenter. HOT!
It seems that broadband is one of the most important sectors to due with the Internet, bringing content to customers fast and with voice, video, and data. Who are the best companies to invest in both short term and long term? Please comment on Digital Island (ISLD:Nasdaq) vs. Akamai (AKAM:Nasdaq).
Two good companies. I pick Akamai.
TSCModerator Laura Poynter:
Thanks so much for all of your questions. We'll do this again soon.