Cruttenden Roth Conference: @Home, Big Dog and More

News and notes from the first day.
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LAGUNA NIGUEL, Calif. -- Life could be worse than attending this

Cruttenden Roth Growth Stock Conference

. It's being held at the massively plush Ritz Carlton Laguna Niguel Hotel, on the cliffs above the Pacific Ocean. It's not warm here; the locals are even calling this a "cold" spell since the sun barely shines through the haze and highs can't seem to break 70.

Cold spell. Right.

About a thousand money managers have registered for this show, and they're here to see presentations by 121 publicly traded companies, many in the micro-cap category on which few conferences focus. Some bigger stocks are here too -- well, bigger than micro at least.

@Home

(ATHM) - Get Report

and

Earthlink

(ELNK)

, as well as companies with an average daily volume under 48,000 shares, such as

Eltrax

(ELTX)

.

But the market cap of the companies is not the only difference between this conference and

others. The fund managers are also of the microvariety: There are as many hedge funds as mutual funds here. Some heavy-trading "high net worth individuals" (as the lingo goes) populate these sessions as well. "These are people who don't get to come to the big shows the San Francisco firms hold," says Cruttenden Roth CEO Byron Roth.

As the sun broke through the clouds at lunchtime, they were surely thinking they never had it so good.

Big Dog Story

The first time we encountered

Big Dog Holdings

(BDOG)

was years ago, when we threw a friend's Big Dogs Frisbee to our big dog, who took a nice chomp out of it with her big teeth. Big Dogs was better at surfer clothing than pet paraphernalia.

So we were surprised when Big Dogs big chief Andrew Feshbach said at the Cruttenden Roth Growth Stock Conference that the company actively targets dog owners, who now make up two thirds of the company's customer base for its T-shirts, shorts and assorted sporting attire. Dog owners, not surfers. How'd we miss this -- crazed dog owners that we are? Neither we nor our big dogs own a single Big Dogs shirt.

Hence Big Dogs' problem. Feshbach admits that only 10% of the population has heard of the Big Dogs brand. The company has relied on word-of-mouth through traffic to its growing number of retail stores, which are situated on the outskirts of major cities. The company advertises in a "grassroots" manner: A mass dog walk that the company stages in Santa Barbara, Calif., draws a turnout of 1,500 dogs.

Public knowledge of the company could improve with the Internet, he said. Nonretail sales (mail order and Internet) in the fourth quarter were $3.9 million, up 22% from the previous year. This news propelled the languishing stock up 27% to 7 1/16 on Jan. 11. It has since fallen back to below 6, a price Feshbach thinks is below fair value, despite having little growth in comparable store sales last year.

We can't help thinking about advice our friend Nick Moore, portfolio manager of

Jurika & Voyles

once gave us, which we'll call Moore's Law: Think twice about a company that has its potential stock price in its name (

3D Labs

(TDDDF)

,

3DFX

(TDFX)

). What would he think about a company with the word "dog" in its name?

@Home, @Home on the Range

Penetration, penetration, penetration. That's the mantra

@Home

(ATHM) - Get Report

CFO Kenneth Goldman was chanting at the company's presentation.

Penetrate the cable-modem business this year, mass market those modems next year. Some might point out that the company has managed to lasso just 331,000 subscribers in its four years of operation even though 13 million homes now have cable-modem capability. To Goldman that illustrates @Home's potential. By 2002, some 63 million personal computers and 15 million TVs in 2002 will have Internet access, a nice market for @Home, Goldman says.

Goldman says by the second quarter of this year, consumers will find standardized cable modems in stores, and PCs with cable modems will appear by the end of the year. And watch for those long-awaited Internet-ready, interactive set-top boxes, he says. They will show up by the fourth quarter. "We now have it up and running," Goldman says. "

General Instrument

(GIC)

just has to get the boxes out."

Cable-modem acceptance is growing. The company started in 1998 with 50,000 subscribers but pulled in 120,000 new subscribers last quarter alone. Goldman hopes to spread the word about @Home cable modem service through its recent merger with

Excite

(XCIT)

, which will give it access to Excite's 20 million registered users.

@Home stock, meanwhile, rose 14% to close at 109 7/8 Thursday.