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Inktomi, Net Grocer, Recoton and Motorola

A selection of some of the most intriguing tech stock ideas on the Web. The items presented do not represent the views of; rather, the collection is offered as a service to our members who may be scanning the Web for stock-related information.


William Schaff



may be best known as the search-engine provider that replaced





site. But Inktomi is not just another search engine and portal-site wannabe. The company "focuses more on technology and applications and less on branding its own name," says an admiring William Schaff, chief investment officer of

Bay Isle Financial Corp.

in San Francisco.

No fan of search engines, which he views as a commodity, Schaff says he's "excited" about other Inktomi applications, particularly its

Traffic Server

network-caching software, which cuts down network traffic and improves bandwidth. Because it is a software, rather than hardware, solution, the Traffic Server can be implemented quickly and cheaply compared to competitors' solutions, he says.

Inktomi is not expected to break even until 2000, says Schaff. Still, he believes the company "is more than a flash in the pan." Its stock, which went public at 18 on June 8, was at 55 when Schaff wrote that it was too high to buy. But it has fallen to 48 in this week's selloff.

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Net Grocer

Steve Harmon

Internet stock analyst Steve Harmon says he doesn't expect many investors to be hungry for shares in

Net Grocer

, which announced plans last week to go public. The online dry-goods seller had revenues for $406,000 for the quarter ended March 31, compared with $17.53 million in revenues for the quarter ended June 30 for rival online grocer




According to Net Grocer's filing statement, the company plans to build business by buying exclusive advertising spots on

America Online


, Yahoo! and



for two to three years. "Clearly Net Grocer plans on riding the growth of three of the top 10 Web services and networks," says Harmon. That growth could "fuel Net Grocer to PeaPod-type sales levels," says Harmon, if the concept of buying groceries via the Web takes off.

One the other hand, PeaPod, the leader in this segment, "gets zero interest on Wall Street," says Harmon.

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Douglas Raborn

New digital entertainment products, such as DVD, should fuel a consumer electronics boom, says Douglas Raborn of

Raborn & Co

. That's why he's accumulating shares of



, maker of consumer-electronics accessories, loudspeakers and car-audio products.

The company surprised analysts with first-quarter earnings of 30 cents a share, more than double expected earnings of 12 cents a share. Second-quarter earnings are due next week. The consensus is 27 cents a share. Raborn says he expects another upside surprise.

Recoton is a leader in wireless speaker technology, and manufactures well-known brand names such as


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Acoustic Research

. The company recently got its entire speaker line into


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-- a big win, says Raborn. It also supplies products to


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Best Buy

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Circuit City

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Only a few smaller brokerage houses cover Recoton, but Raborn expects that to change. He forecasts earnings of $1.18 in 1998 and $2.80 in 1999 and targets a share price of 56. It's currently trading at 29.

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is reeling from the Asian financial crisis and the worldwide semiconductor slump. But the biggest factor in its decline is the startling failure of its cellular business, says

. The company "completely missed the digital revolution in cellular phones," and it's going to take at least a year to catch up.

Motorola's share of the cellular market has fallen to 29% from 46% at the end of 1995. This Christmas, Motorola will offer two new digital phones, but they won't be the "tri-band" variety that are both analog and digital and operate on the 800 Mhz and 1900 Mhz frequencies. Those won't arrive until next year's second quarter. Meanwhile, rivals




NOK.A ADR) and




ERICY ADR) both have tri-mode phones on the market.

The good news is that Motorola is reorganizing its telecommunications businesses under a unified and seasoned management. And, once the company gets its digital products to market it can use its distribution-channel dominance to catch up. Meanwhile, says

, professional investors are "bailing out" of the stock and many analysts rate it a hold (though


Mona Eraiba repeated a buy recommendation this week). The share price of 52 is down from a high of near 80 a year ago.

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