Exodus, Navisite in the Thick of a Boom, Analyst Says - TheStreet

SAN FRANCISCO -- Well somebody isn't getting enough fiber in his diet.

Robertson Stephens

Internet infrastructure analyst Richard Juarez isn't impressed by the alleged bandwidth glut. Juarez filled his presentation here Wednesday at the

Robertson Stephens Internet Conference

on the state of the Internet and e-commerce infrastructure with snickering derision of "glass in the ground," the fiber-optic bandwidth that many e-commerce hopefuls expect will soon to be at their disposal. Juarez thinks differently, cracking jokes about everything from shoddy DSL installation to the lack of messaging products that will make companies engaged in B2B comfy with the new medium. Apparently, we're not as developed as we wanted to be.

But where there's a will, there's a way to make money.

Juarez insists that we're in the maturing second and budding third phases of e-commerce development. We're so over what Juarez calls "point solutions" filled by Internet service providers and very focused, narrow applications. "Take

Oracle

(ORCL) - Get Report

business applications, they're a dime a dozen. I'm not very bullish on that sector," he says.

Instead we're into the thick of the growth of the application and Web hosting boom, led by

Exodus

( EXDS),

Navisite

(NAVI) - Get Report

and

Digex

(DIGX)

.

Not that these three players have it easy; the latest evolutionary steps of the Web-business world are being imprinted by the baby booties of stage-three youngsters

LoudCloud

,

Jamcracker

(led by the founder of Exodus) and

MimECom

. These toddlers are mixing together software and infrastructure expertise and have a chance, according to Juarez, to lock in infrastructure dominance.

"Imagine if you had the advantage of having software vendors saying, 'I want to write my solution to your platform,'" says Juarez. "It would be a tremendous competitive advantage." (Robertson Stephens has locked itself in a banking embrace with Exodus and Navisite, but not Digex and the younger, private companies.)

Are you all tingly yet?

When Juarez picks his winners, he likes the companies that host Web businesses and critical Internet-based applications for others, including Exodus and friends; companies that keep an eye on Web site performance, such as

Keynote Systems

(KEYN)

; and more focused applications that help companies do business on the Web, such as messaging player

Critical Path

(CPTH)

. (Juarez's company has done banking for both.)

While fiber might not be giving Juarez the bandwidth he's looking for, the messaging world is doing its part to clog up the Internet. According to Juarez, less than 500 million email messages were sent daily in 1995, but by 2005 Robertson Stephens expects that number to hit 26.1 billion -- driven by e-commerce communication.

Equally divine are services that extend the Internet, such as Internet telephony infrastructure competitors

iBasis

(IBAS)

and

Net2Phone

( NTOP). (Again, Robertson Stephens banking partners).

A long, profitable road ahead.

It's the same old song.

eBay

(EBAY) - Get Report

CFO Gary Bengier dusted off a 2-year-old road show presentation to celebrate how far eBay has come -- and perhaps to separate it from rival

Amazon.com

(AMZN) - Get Report

as a member of wrinkled but wiser department.

Crazily enough, those 2-year-old goals and strategies weren't moldy enough to set off the allergies of the sensitive banking crowd. eBay is still the largest trading community. It's still adding services to squeeze more money and joy out of its customers. It has expanded geographically into 60 local sites so metropolitan-area sellers can pursue different types of sales, and it has opened up trading sites for Japan, the United Kingdom, Germany, Canada and Australia.

Oh, and as for what Bengier called his "most favorite section" of the presentation, profitability, eBay achieved that last year. It also clocked $87.9 million in second quarter revenue in 2000, a number Begnier insists could be better, if not for expansion into succulent business arenas such as the acquisition of

Half.com

for books, music and movie sales outside the auction realm.

eBay has a strong $839 million of cash and equivalents in the bank. Throw in 115 million page views a day and a 76% gross profit margin in the second quarter, and it's safe to say eBay is looking smart.