SAN FRANCISCO -- For Onsale (ONSL) , not only does size matter, "it's critical," says CEO Jerry Kaplan, referring to the size of orders from customers, especially when margins are razor thin. The larger the order, the bigger margins tend to be, he says.
Kaplan and other execs were silent about the state of Onsale's margins. Earlier this month, when Onsale reported its first-quarter
earnings, the company confessed that its margins would halve to about 4.5% for at least the rest of 1999. Yet executives maintained at Onsale's presentation at the
Hambrecht & Quist Annual Technology Conference
that its margins are stable, and the target is 8.5%, just below the 9% achieved in the first quarter. CEO Jerry Kaplan, however, failed to mention during the presentation exactly when management thought that target would be achievable or sustainable.
As it turns out, Kaplan skipped ahead in the company's timeline. Following the presentation, company CFO John Labbett told
the 8.5% goal was expected over the next three to five years.
So why didn't executives mention that margins were falling to about 4.5% near-term? "It's not a subject of a general presentation," says Labbett, noting that there will likely be questions about margins in the breakout.
Onsale closed up 1, or 3.6%, at 28 3/8.
-- Suzanne Galante
Earnings Season Smooth
Earnings season has gone relatively smoothly for the technology sector, though a number of high-profile companies will be reporting this week. There has been some concern that once the good news was out of the way, the sector could see a selloff. That talk may be premature.
Robert Dickey, director of technical research for
Dain Rauscher Wessels
, says things could be different this time around because "normally, the first quarter is on the disappointing side and that puts cold water on the market for the next six months. This year, reports are coming in better than expected."
Dickey sees the run in the market continuing for the next two to four weeks before it corrects, then spends the summer "in the doldrums."
"I'm telling people to get it while you can. This is a grand gift to everybody and you have to get and take advantage of it." Dickey sees gains in the Dow to the 11,400 level, though admits it may be too conservative. If the Dow goes up another 6% to 8%, he says the Nasdaq will be twice that, though he admits it is difficult to quantify how strong gains will be with the market in a "frenzy" mode.
"All the old ways of measuring the market fundamentally and technically are out the window," he says. "We're running on fumes and momentum and that's difficult to measure. The only thing you can say is you've got to go with it. It's a frenzy and frenzies are always undefinable in statistical terms."
Also taking a positive approach is Bruce Smith, Internet analyst with
Jefferies & Co.
Smith says seasonality is working in favor of the Internet companies and the second quarter is the second-best quarter of the year in terms of advertising, which is still the major source of revenue for many Internet companies.
"The first quarter is by far and away the worst quarter" in terms of advertising, he says. "The fact that we've gotten through the first quarter without any major blowups is extremely positive. I'm very bullish, particularly as we move to the June quarter and we get confirmation of just how strong business is."
Among the stocks Smith likes are
, companies for which Jefferies & Co. has not done underwriting. He says the "biggest risk" for Net stocks is a broader market correction, but he is not particularly concerned about valuations.
"Anyone who spends a lot of time on valuations, including myself, is wrong, and as long as we continue this hypergrowth, valuations should not be a major consideration," he says.
Big winners today were companies that will be reporting earnings sometime this week.
, which reported earnings after the close, closed up 8 7/8, or 4.4%, at 209 on Monday, though there was profit-taking in the stock after it ran up to an all-time high of 217 5/8 early in the session. eBay reported earnings of 5 cents a share for its first quarter, which was above the
estimate of 2 cents a share. Net revenues were $34 million vs. $6 million in the first quarter of last year and $19.5 million in the fourth quarter of 1998. Earlier, the company said it would buy the
Butterfield & Butterfield
auction house for around $260 million in stock.
A number of other strong performers report earnings on Tuesday.
was up 17 3/4, or 12%, at 165;
was up 11 7/16, or 8%, at 158 7/16; and
was up 14 3/4, or 13.5%, at 123.
And when Net stocks perform well, so does
, which provides capital for Internet ventures. CMGI was up 23 1/2, or 9%, at 282 3/8.
was the leading point gainer on the Nasdaq after a number of research firms began coverage of the company. It closed up 32 3/4, or 37%, at 120 3/4.