Front Page || Main Index || Corpus Christi News || Business || Texas || Sports || Entertainment || Selena
Saturday, Jul. 18, 1998
Internet stocks draw trend-conscious investors
Broadcast.com, with no record of gains, quadruples share value
By DAVID E. KALISH
Associated PressNEW YORK - Lifting the Internet craze to new heights, investors on Friday snapped up the newly issued shares of an obscure, money-losing company in one of the year's hottest initial public offerings. The buying spree nearly quadrupled Broadcast.com's stock price in its first trading day.
The public sale of stock by the Dallas-based Internet company was just the latest example of investors' enthusiasm for placing risky bets on firms with unique visions for the World Wide Web.
But Friday's stampede stood out in a year that has seen an array of Internet stocks soar.
Broadcast.com broadcasts live audio and video across the Internet to Web sites so that Internet surfers can view programming much like television. The niche excites investors who believe the Internet one day will be a main conduit for entertainment, news and other programming - even though the young technology often results in jerky images that are slow to download across computer networks.
Lost in Friday's excitement was the fact that Broadcast.com, like other Web companies, has yet to earn any money in its short history of operations.
``You stick the word Internet on anything and the value will go through the roof,'' said Melissa Bane, an Internet analyst with the Yankee Group, a Boston-based research firm.
``I think it's safe to say there is some measure of irrationality in the valuation of these Internet stocks today.''
For weeks investors eagerly awaited the Broadcast.com public offering as investment bankers on the deal assessed market demand.
First they hiked the opening price by more than a quarter, to up to $16 a share from its filing price. But last-minute anticipation lifted the final opening price on Friday to $18 a share.
Buyers of the new Broadcast.com shares sent the stock price rocketing to $72 a share at one point. The stock eased a bit to close Friday at $62.75 a share on the Nasdaq Stock Market.
Bane and other analysts say it's just a matter of time before the market and the stock prices come back down to earth.
Still, some see the investors making a down payment on the Internet's long-term, if somewhat hazy, future, which is swiftly transforming how millions of people communicate, make purchases and get information.
By 2002, the total value of goods and services traded over the Internet in the United States is expected to reach $250 billion, according to International Data Corp., a research firm based in Framingham, Mass.
That prospect has investors excited. Egghead.com's stock shot up by about two-thirds two weeks ago after the seller of personal computer hardware and software reported its revenues from Web sales nearly doubled. The Spokane, Wash.-based company shut its money-losing brick-and-mortar retail stores last year to focus completely on sales over the Internet.
Likewise, K-Tel International's stock surged repeatedly this year after the company announced plans to sell its music titles online and publish Billboard's weekly charts of best-selling music and videos on the Internet.
Still, the enthusiasm isn't completely unbridled. PointCast Inc., a one-time high-flying Internet pioneer, this week withdrew plans to go public and instead is seeking to join with another company to expand its business.
PointCast was hit by flagging investor interest in its so-called ``push'' technology, which sends information across the Internet directly to one's desktop computer so that users don't have to search for what they need. PointCast's software enables ``viewers'' to receive channels of news, sports and other information contributed by media companies.
Instead, investors have focused on Internet companies that operate comprehensive Web sites, providing an array of services and search engines that help guide users to other locations on the Internet.
That trend has benefited companies such as Yahoo and Excite, whose stocks have skyrocketed this year.
One company that hopes to follow Broadcast.com's success is Pseudo Programs Inc., a maker of Internet programming and broadcaster of audio and video over the Internet.
The New York-based startup, with only 45 employees, hopes to expand enough by next spring to go public.
``The thing the investors are getting excited about is the fact that television is coming to the Internet,'' said Pseudo chief executive Josh Harris.
The trick is, ``How do you enter the market correctly?''Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web