Why the Non-Net Net Stocks Are a Sucker's Play

Companies that don't live and breathe the Web are just doing lip service to it.
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IBM's

(IBM) - Get Report

advance Thursday will no doubt cause another revaluation of the non-Net nets. I saw

BancOne

(ONE) - Get Report

, widely perceived as a non-Net Net play, starting to take off Thursday, as IBM's

Gerstner

praised it.

Wells Fargo

(WFC) - Get Report

gets a boost today in the Inside Wall Street column of

Business Week

, for the same reason. I guess another article/reit buy will be coming for

Wal-Mart

(WMT) - Get Report

soon, as it does a lot of Net business, and it, too, got blessed by Gerstner. And of course, we have

Barnes & Noble's

(BKS) - Get Report

soon-to-be-showcased Net gambit.

Is this a sucker's play? Unequivocally, I think, yes. I think these pseudo-Net plays are one-shot deals. These non-Net companies embrace the Net in strictly a collateral form. I will trade them, but I would rather be invested in the companies where the Web is a way of life.

Let's take Wal-Mart. The Old Guard's rap on Wal-Mart is that

Amazon

(AMZN) - Get Report

will ultimately get its comeuppance from the Bentonville giant. Like "you ain't see nothing yet" -- wait until Wal-Mart ramps up its Web business. Wrong!

Wal-Mart already does a huge Web business. It has already ramped. But it will never be meaningful for the company. Ever. In fact, I think Wal-Mart regards the Web as an obstacle, something that actually hurts its core mission of bringing people into stores so that they impulse buy. Its Web presence co-exists with its brick-and-mortar operations, but can never supplant them. Nor does Wal-Mart want them to. That would be bad for the real business.

BancOne may do some super business on the Web, but the barriers to every other bank on the Web are virtually nonexistent. That doesn't mean BancOne doesn't get the Web; it does. It just means that it is talking more loudly about it.

Wells Fargo? Let me tell you about Wells Fargo. When we started

TheStreet.com

, I heard they were really into the Web. So I went to their site and I emailed everybody listed. No response. For months, I kept after them with emails. No answers. Maybe they are there now, they sure weren't when it could have made a difference.

I don't think these old-line companies with Web ops are the answer. My experience with these companies -- not as a stock player, but as a businessman -- is that there are entrenched interests that pay the Web grudging recognition, but simply aren't into it. They are into the stock appreciation that Web traders generate. But they aren't into turning their organizations upside down, or brooming the bricks-and-mortar guys or reinventing their culture.

They are just talking the talk.

My closest experience is with media. I talk to a lot of media chieftains and they are all gung-ho about getting on the Web, and getting it right, and getting eyeballs and pageviews. They want to do deals and mix it up and become Web-oriented.

And they don't have a clue.

They don't know that the Web is a culture and a business. That it involves much different skillsets from their own. And it involves hard work and interaction with people, many of whom they would prefer NOT to interact with. And when the advertisers move to the Web, these guys will be up the proverbial creek.

Some off-liners will get it for sure. But it won't be from their colleagues or their lieutenants. It will be from their kids. Because if they had any horse sense, they would have been on the Web three years ago, when it was a frontier and you could homestead cheaply.

So, call me cynical about the non-Net nets. They can break down their sales to show Web business, they can claim they are the keys to the Net. They can set up stubs and dummy companies that include their Web operations. They can set up Web tracking stocks for all I care.

To me, if I want exposure, I want the companies that understand the Web as a core competence, that live and breathe it and don't have competing interests

within

the companies that wish the Web would go away. (

Cisco

(CSCO) - Get Report

,

Dell

(DELL) - Get Report

and

Sun

(SUNW) - Get Report

are the only ones I know that definitely DON'T feel that way.)

I'll let Gerstner hype the others.

Random musings:

Reading

Lashinsky

this morning, I was struck by the notion that

Silicon Graphics

(SGI)

, the company that first did dinosaur imaging, has truly become a dinosaur, and in record time.

James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund was long Cisco and Dell. 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

letters@thestreet.com.