The Net's Big Shakeout

We're starting to see the better Net players break from the pack.
Author:
Publish date:

The coming Net shakeout is here! Amazing. It only took a couple of quarters, but now we see who can execute and who is faltering.

Infoseek

(SEEK)

,

Excite

(XCIT)

and

Onsale

(ONSL)

all reported just plain so-so numbers, including penny misses and top-line sloppiness. Red-hot Internet sector -- not!

Yep, things got so crystal clear that this morning

Lycos

(LCOS)

took the extraordinary step of saying that it isn't like Excite and Lycos, that it will do the number! Yet close observers couldn't help but notice that its number was just an in-line one, nothing better, and was issued because of, as the release says, "slowing growth announced by several companies in the portal space." When you get the kind of weirdo multiples we have in this group, you have to blow-away numbers. Unless you are a jalapeno No. 1 chili pepper, you have to be red hot to be called red hot!

What's going on here? I think the Net is starting to differentiate.

Some companies are starting to pull away from others. I see

Yahoo!

(YHOO)

,

America Online

(AOL)

,

ebay

(EBAY) - Get Report

and

Inktomi

(INKT)

pulling away from the pack, which is why I am long them. I see these guys executing perfectly, despite flying at

warp

speed. But I see the other portal guys slowing down to below the speed of sound.

We will see how much further things shake out today. If these analysts want to be more than shills for the industry and the investment-banking side, you ought to see some downgrades coming down the pike. Pronto.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long America Online, eBay, Inktomi and Yahoo!, although positions can 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

letters@thestreet.com.