Andreesen sells 25%; Amazon capped out; 40% illiteracy...

I Find Karma (
Tue, 17 Mar 1998 03:44:19 -0800

> Internet Stocks Give Some Experts Vertigo
> Source: LA Times Business Section, 3/16/98
> Amazon.Com finished last week with a market capitalization approaching
> $1.9 billion, despite the fact that the online bookseller has never
> had a profit and posted sales of just $148million in 1997.
> In contrast, rival Barnes and Noble Inc.'s market value is in the same
> ballpark at $2.6 billion, even though it, too, has an online business,
> not to mention 1006 stores and $2.7 billion in sales -- 18 times
> Amazon's in 1997.

Okay, Amazon's revenue in 1997 represents an 841% increase for them, but
the stock still seems way overpriced.

Like Yahoo, which has a price-to-earnings ratio of 170 (!). That's
insane -- in 1997, Yahoo posted $2.5million profit on $67million in
sales. So why in the world is their market cap at $3.82billion (based
on stock price $92.38/share last week)? Irrational exuberance.

And Earthlink may have grown to what they claim is 650,000 subscribers,
but geez, does that mean their market cap should be $600million (based
on stock price $58.44/share last week, up from the $13 IPO in Jan 97)?
No. Those Sprint subscribers who are gonna be absorbed by Earthlink are
in for a sweet surprise if they thing they're getting a deal. And what
the heck are the stockholders thinking? They make about as much sense
as Hasbro acquiring the rights to the entire portfolio of Atari games
from JTS. It's not as if Earthlink has ever turned a profit either...

Amazon, Yahoo, and Earthlink stocks seem like one big pyramid scheme.
Sort of like the Netscape of 1995-96. Well, that scheme broke and so
will these...

Other bits in the article:
- Yahoo was visited by 40% of all Internet users in January,
nearly double its closest competitor
- Number of Internet users worldwide, end of 1997: 68 million
Predicted for end of 1998: 97 million
[source: International Data Corp.]
- Web advertising is expected to grow from $940 million last year
to $7.67 billion by 2002
[source: Jupiter Communications]

On to our next article...

> Andreessen Sells 25 Percent of His Netscape Shares
> Source: Wired News Report
> 6:52pm 13.Mar.98.PST -- You gotta know when to fold 'em: Golden boy
> Marc Andreessen, co-founder of Netscape Communications, sold 25 percent
> of his stake in the company last month for more than US$7 million,
> according to a Federal Filings report. He sold 375,000 Netscape shares
> at around $20 a pop between 19 and 23 February, leaving him with
> 1,134,589 shares, and controlling another 10,000-plus shares in trust.

I asked Rohit what the heck he was waiting for if he wanted to sell a
fourth of his holdings. Rohit says, part hubris that things would
rebound, part SEC filing requirements, and part selling at a time that
wouldn't cause a ruckus.

Whatever. $7million is certainly more than he's worth to the company at
this point, so anything he makes from herein will be gravy...

And one more article from WiredNews...

> The haves and have-no-interest: Thirty-six percent of consumers in North
> America who do not own a personal computer said they have no reason or
> interest in buying one - no matter how low the cost, according to a
> Forrester Research study.
> The study also showed that 43 percent of North American households
> currently have a PC, and 50 percent will have one by year-end 1998.
> "There is a gaping divide in the population," Josh Bernoff, a Forrester
> Research analyst, said. "The main reason the non-owners in that group
> say is that they don't need it." Bernoff said that high-income
> consumers, with annual salaries of more than $35,000 are nearing the
> saturation point, with 69 percent already owning a PC.

I guess this 36% are the same 36% (+/- 4% error) who will never learn to
use those large illuminated displays at McDonalds referred to by Greg

Speaking of which, man hypermail has done some weird thinks to the March
1998 FoRKives:

Clearly this program was not designed to handle threading of any
complexity beyond linear.

I'll close with an interesting little piece of food for thought from
Wired News: whether content written strictly for the Web is dead on

> Is Content Dead on the Web?
> by Steve Silberman
> 5:02am 13.Mar.98.PST -- Is your bookmarks file of hip Web sites getting
> smaller?
> Last year, it was Urban Desires - following shortly after Wired
> Digital's own Pop - that lost its backing. Both became ghost sites.
> This year, it's Word, Charged, Total New York, and Spanker that are
> headed to the digital graveyard - and it's only March.
> Call in the augurers of new media. "Content a Tough Sell on Web," ZDNet
> declared in the wake of the news about Word, Charged, and the New
> Century Network. The death of Word may have stung the most. Even the
> not-noticeably hip PC Magazine had lauded the spunky site as "the
> quintessential ezine." What happened?
> Is the Age of Content over on the Web? Should we go back to reading
> magazines?
> Waiting for literacy
> Steven Johnson, founding editor of one of the quintessential ezines that
> shows no sign of going under, Feed, believes the era of editorially
> substantive and financially viable content sites on the Web is just
> beginning. What the industry needs, says Johnson, is vision at the top
> of the masthead, and patience at the bottom line.
> "Launching an online magazine today," he observes, "is like starting a
> print magazine in a market where only 10 percent of the people are
> literate. The good news is, next year, 20 percent of the people will be
> literate."
> Feed's co-founder, Stephanie Syman, concurs.
> "We're doing something experimental in an industry that's still very
> immature," she says. Expectations by parent companies and investors that
> online publications will turn a profit faster than print ventures are
> unrealistic, she contends. This is partially the result of money coming
> in from backers in the high-tech and telecommunications industries,
> rather than from media veterans.
> "Those notions of success are derived from a technology cycle that is a
> most inappropriate framework for looking at the success of a magazine,"
> she says, pointing out that magazines on paper don't typically get out
> of the red for three to five years.
> With the failure rate of new print ventures running at a daunting four
> out of five, according to Samir Husni's Guide to New Consumer Magazines,
> what's to keep your just-launched Webzine from tanking?
> Dan Pelson of Concrete Media, who germinated the core concept of Word
> for its parent company, Icon CMT, believes that one of the mistakes the
> Word team made was never to sufficiently identify their readership.
> "You define the audience for the audience itself, so they know they can
> go to your publication and have a certain kind of experience, over and
> over again," he says, "and you define it for your advertisers and
> business partners."
> Pelson's latest online properties, Bolt and Girls on Film, are aimed at
> much more closely defined audience niches than the generally cool Word
> was, and advertisers like Procter and Gamble, Sony, AT&T, and Sprint
> have signed on.
> Even though Word got "tons of great press," Icon was content to use the
> ezine as its hip calling card, without giving it the ad sales muscle and
> editorial resources it needed to survive, Pelson says. Pelson predicts
> the next wave of successful sites will be what Zona Research calls
> "market makers" - publications that match up targeted audiences and
> vendors, and are equipped with the e-commerce tools to make transactions
> on the site.
> More than sticker-deep
> Stim's editor in chief, Mikki Halpin, was brought to Prodigy to launch
> the Gen-X-targeted site by former CEO Ed Bennett. The flashy
> fringe-culture journal was one of Bennett's flagship projects, she says.
> When the site launched, a Stim sticker was plastered onto the Prodigy
> stock car.
> The problems set in soon after the site came online in May of 1996,
> Halpin reports, when repeated requests to hold meetings to talk about
> Stim's business plan were ignored. Bennett was already on his way out of
> Prodigy, and "we were in our own little world in the office - they were
> from Sears and IBM, and we were the funny-haired people who smoked,"
> Halpin recalls.
> The staff was given plenty of leeway to program edgy content - "they
> didn't give us one iota of trouble for hiring hookers to write stories,"
> says Halpin - but the Prodigy ad sales team, used to setting up deals
> with clients like Ford, didn't know how to pitch Stim. By the end of the
> year, Prodigy was trying to off-load the ezine to "a company that
> printed folders that went in hotel rooms," Halpin reports, and by
> January, the staff had been given their severance packages.
> Now Stim is Halpin's labor of love, published whenever time and
> resources allow.
> Growing new voices
> David Talbot, the editor and CEO of Salon, observes that magazines that
> are launched as spinoffs of other, non-journalistic ventures, with young
> staffers who have little experience in reporting and editing, "face
> difficult sledding."
> Still, he believes online publishers have an obligation to "grow new
> voices."
> When Talbot was employed at the San Francisco Examiner, it had been
> years since anyone in their 20s had been hired on the editorial side, he
> recalls. Talbot says he made it his business to read through obscure
> zines looking for bylines he didn't recognize, and now, at Salon, he
> expects his senior editors to make "the hunt" for new writers part of
> their daily responsibility.
> By offering a mix of young and seasoned voices at Salon, and by
> attracting an affluent, well-educated readership, Talbot has locked down
> advertisers like Borders, IBM and Mercedes, and tripled its page-views
> since last February.
> Soon, Salon will open an office in New York to ramp up its presence in
> Silicon Alley, and a prototype weekly print version is in the works,
> Talbot says.
> Keeping it sticky
> For John Borthwick, director of America Online's Digital City Studios,
> the death of publications like Word signals that the online publishing
> world is entering a new phase.
> "The age of zines is over," he believes - but the days of producing
> content for much larger audiences are just beginning. When Borthwick
> sold the studio that produced Total New York and adaweb to AOL a year
> ago, he says, he saw his page-views soar to one million a day in three
> days.
> Borthwick calls content the "sticky" part of the online experience.
> "Content is what creates associative relationships online, peer-to-peer
> relationships. Content is the experience that sticks with readers," he
> says. Putting names that readers recognize from other media on the table
> of contents - such as Pete Hamill and Wendy Wasserstein - helps evoke
> the trust that makes content "stick," Borthwick believes.
> Despite the studio's termination of the Total New York and adaweb brands
> (adaweb will continue with a non-profit sponsor), Borthwick describes
> CEO Steve Case as "completely committed to content."
> AOL's Regina Borgia explains: "Our average user is spending 52 minutes a
> day on the service now. First they emailed, then they chatted, and this
> Christmas, they shopped online. Now they're looking deeper. The content
> has to be there."


Stock in McDonald's restaurants is no longer in the Berkshire Hathaway
portfolio. Last year, Warren Buffett suprised shareholders when he
doubled Berkshire's holdings in the fast-food giant.