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There were several interesting items in an article in yesterday's Wall
Street Journal:

Said Rick Vanzura of Borders Books: "Right now there are zero incentives to
maintain profit margins. All the incentives are to increase revenue, even
if that means doing business at a loss."

According to the author, George Anders:

"Hoping to stand out from the crowd, many Internet merchants have budgeted
as much as 70% of their venture-capital seed money for marketing."

"Anne Benvento, senior vice president for marketing at Auto-By-Tel Inc.,
says only 1% to 1.5% of Web viewers are clicking on her company's car sale
banners now. A year ago, she says, the figure was 2%, and two years ago 3%.
And executives at Garden Exchange Inc., an Internet garden-supply company,
say they are moving more of their ad budget away from the Net and onto
cable TV, which they think can be more effective."

"Venture capitalists readily acknowledge that an electronic-commerce
shakeout is looming, making it likely that they have bankrolled far too
many such startups. Yet with the stock market giving hefty valuations to
almost any on-line business, they say they feel obligated to keep placing
bets at the Internet casino until they stop winning."

The article also says that some analysts defend the valuations saying the
Internet is like television in the early years. However, one analyst,
Andrea Williams, ran the numbers on Amazon.com and even projected a
generous improvement in operating margins by 2001. "... she has tried
assigning Amazon.com a price/earnings multiple of 100 three years from now.
(The typical stock currently trades at a multiple barely one-quarter as
high.) If Amazon.com meets all those targets, she says, it could trade at
$85 a share. Yesterday, Amazon.com closed just above $134."


Suzanne

_____________________________________
Suzanne Lainson
SportsTrust
Marketing: Integrated/Sports and Event/Online
P.O. Box 2071     Boulder, CO 80306
303 473-9884
slainson@sportstrust.com
_____________________________________
For a free subscription to SPORTS NEWS YOU CAN USE, send me an email.
For a free subscription to THE CREATIVE ATHLETE, send me an email.
http://www.sportstrust.com/sportstrust



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