SNOWBIRD, Utah -- Everybody wants to create some buzz at the
conference. But for some companies, generating the excitement is harder than usual.
Sure, in terms of market cap, they're both at the top of the Internet heap, but consumer media companies are suffering some.
is more than 30% off its 52-week high, and
is burdened additionally by investor ambivalence over its deal to join with
Further proof can be seen here. After AOL CFO Mike Kelly talked about the transformational aspects of the AOL-Time Warner deal -- "We don't know what's going to come. We know it's going to be huge" -- the gathering at the breakout session seemed awfully quiet. When Yahoo! CEO
stepped into the hallway, the crowd of Net-stock groupies who gathered 'round didn't seem as desperate as they had in the past to hear his every utterance.
So what's going on? To every season, turn, turn, turn, Koogle suggests. "I know there's a lot of discussion about B2B," he says with his characteristically mysterious half-smile. "But these things happen in waves."
One buy-side analyst at the conference, asking not to be identified, says the business-to-consumer companies, a.k.a. the B2C segment, are suffering from holiday-season comparisons -- business, the perception is, won't pop in the first quarter the way the fourth quarter outstripped the first.
Another anonymous buy-sider -- not an AOL shareholder -- faults AOL's story following the Time Warner deal announcement. The respectable growth the company is projecting is "very 1980s," the money manager says, adding, with the Street's characteristic warmth, that the stock is dead for the year.
Yahoo! did manage to get across the point that it thought its international growth is big, and would continue to be big. Its stock was up 8% for the day, while AOL's fell about 2%. Was Yahoo!'s move due to international buzz? Hard to tell.
Big, Bad Broadband
Broadband is big. Really big.
That's the message that
CEO Chris Kitze hammered home in his Monday presentation.
So big, in fact, that he tried to Woodstock-ize his pronouncement -- that is, turn it into an event that people would remember fondly because they heard it in person. He wanted attendees a year from now to be telling people, "I heard it first at the conference. This is going to be a big thing."
So how important are high-speed connections to the Internet, anyway? As
previously reported, NBCi has said it's getting triple the money for each thousand displays of a broadband ad than it gets from advertisers for showing narrowband ads -- pitches to consumers with low-speed connections.
But that's only the beginning, says Kitze. Over time, with a few more tweaks on the broadband side and the price of narrowband ads dropping, NBCi will be able to charge broadband advertisers a cost-per-thousand that's five times the narrowband rate. Plus, because users with high-speed connections tend to crowd in a lot more fast-loading pages, they end up viewing twice as many ads as do their dial-up cousins.
So broadband has the potential to add 10 times the moneymaking power of narrowband, according to Kitze.
That's not all. By this summer or this fall, advertisers will start buying ads not by cost-per-thousand, but by length. They'll buy 30-second ads on the Net, similar to television. It is, he says, a "paradigm shift" -- an expression we dread using, but heck, we just report the news.
Kitze says NBCi estimates that 2 million people get the Internet at home via high-speed cable or telephone digital subscriber lines. That number will go to north of 70 million by 2008, according to one of his slides. NBCi won't be making any "crazy giant acquisitions," he says. But look for the company to do deals to acquire broadband content or high-speed distribution, in particular, getting aggressive with cable operators as
exclusivity deals expire.
NBCi isn't interested in buying into low-speed content providers, Kitze says. Those will strictly be partnerships "There's no point in owning something that's going to be obsolete in a year or two," he says.
Game On? Not Quite yet for Electronic Arts
The landscape of video game stocks is strewn with the wreckage of names such as
, all leaving a trail of disappointed shareholders.
One video game stock has held up:
, which has seen its value more than quadruple over the last five years.
Now, though, with its growth constrained by some industry trends, EA is going to spin off its
division into a separate stock before year's end. But after his presentation here, Electronic Arts chief financial officer Stan McKee warned that the initial impact of Internet gaming will be limited, at least in the near term.
Growth rates are being squeezed by the technological advances of the video game console developers such as
. So, naturally, investors have hoped that platform independent games on the Internet might finally free game-makers from this restrictive product cycle.
To highlight that area, EA demonstrated its forthcoming America Online games portal at the Chase H&Q plaNET.wall.street conference.
"We're still a packaged goods company," says CFO McKee. "We don't expect online to account for more than 15% of our revenues this year, so there's a long way to go," he says. "We also think that online gaming is one of the potential killer apps of the Net, but not just yet."
E-Loan Gets Into the Trenches
, the Dublin, Calif.-based provider of mortgages and car loans, is about to significantly expand its car-loan business. E-Loan is going subprime.
"Currently, only 30% of our car-loan applications are approveable," says Chris Larsen, E-Loan's CEO. "But that will change when we move into subprime." According to Larsen, that move is a top priority for the company, and while he refused to be pinned down on a date, says it will be done before the end of the second quarter. "I know there have been all sorts of disasters in subprime lending. But we sell off the default risk to other lenders, so we're never going to be subject to that risk," he says.
Turning on the switch in accepting subprime customers will significantly add to E-Loan's car loan business. Larsen, however, won't quantify the subprime opportunity, other than to say it's "huge."
The move toward subprime underscores a dramatic change that's been going on within E-Loan's revenue mix. In the first quarter of last year, 96% of E-Loan's revenue came from home-mortgage refinancings.
In an environment of rising interest rates, that would've been a disastrous business model. But E-Loan has quietly added new products to its loan mix, and beefed up other loan segments, such that refinances were only 24% of revenue by the end of 1999. "Our dependency on interest-sensitive products has been drastically reduced," says Larsen.
The additions of subprime will hasten that change. It can't come fast enough for shareholders, because the company's share price has been subprime since its June 29 IPO. The stock, which once traded as high as 74 3/8, is now just barely above 10.