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What companies to look out for in 2000
by Siu-Yee Ng
Linux in 2000
International Data Corp. (IDC) research states that Linux was the fastest-growing server operating environment in 1998, growing more than 190 percent in that year alone and capturing more than 15.8 percent of the 4.4 million revenue shipment server operating systems market segment.
IDC also claims that Red Hat (RHAT-NASDAQ) Linux is by far the most popular distribution, preferred by 68.7 percent of U.S. Linux users. Taipan's initial IPO play on Red Hat has soared 828% since its IPO in August.
Red Hat has gained open source support from many of the industry's leading software and hardware manufacturers, including Compaq, Computer Associates, Corel, Dell, Gateway, Hewlett-Packard, IBM, Intel, Netscape, Novell, Oracle, and SAP.
Red Hat announced plans to buy Cygnus Solutions in a stock deal estimated at 674 million dollars. The deal puts Red Hat in further competition with Microsoft and its Windows CE operating system. Red Hat is positioned to be a big player in 2000.
Wheel and Deal
Interwoven, Inc. (IWOV-NASDAQ) recently announced an alliance with Cisco Systems, Inc., the worldwide leader in networking for the Internet.
Under the agreement, Interwoven will team with Cisco to co-develop Web content management best practices, align market strategies and jointly market solutions to customers. With Interwoven's TeamSite Web content management system and Cisco's Internet Business Solutions this team will provide a robust infrastructure for customers to optimize and accelerate their transformation to eBusiness.
Interwoven will benefit from Cisco's Internet business technology experience as well as its market leadership in networking products and services. Both companies will benefit through joint technical development and integration.
Since its IPO debut in August, Taipan's position has gained a staggering 465%.
Faster and quicker
Digex (DIGX-NASDAQ), a leader of managed Web and application hosting services, recently entered into a strategic agreement that will enhance the delivery of Web content and applications for companies operating mission-critical Web sites.
Digex will offer Akamai's (AKAM-NASDAQ) content delivery services to its e-business and application-hosting customers to optimize end-to-end performance of their Web sites.
Digex focuses on maximizing the availability, scalability, performance and security of customers' Web sites and Internet applications. Akamai's services are the latest addition in Digex's High Availability and Performance suite of offerings which includes local and geographic load-balancing, stress testing, and the recently announced Dynamic Fail-Over solution.
This entire product suite is dedicated to eliminating site downtime that might interfere with mission-critical transactions online. Akamai's Internet content delivery services speed up Web site performance and improve reliability by delivering Web content from Akamai servers around the globe, located close to Internet end users.
Akamai's network today spans 24 countries with 1,475 servers. In addition to hosting servers for Akamai in Digex's data centers on the east and west coasts, Digex will offer a set price for Akamai's services worldwide - without geographic surcharges.
Cyberspace shopping
How many are last minute shoppers? Many shoppers have yet to purchase holiday gifts with only a little over a month remaining. But Internet shoppers have already spent US$201 million in the first week of November and US$222 million in the second week of November according to a survey commissioned by Goldman Sachs and PS Data Online. Jupiter Communications predicts that consumers will spend US$6.1 billion online between Nov. 1 and Dec. 31, nearly double the US$3.1 billion spent last year.
Expect robust online retail sales in the next couple of months and Barnesandnoble.com (BNBN-NASDAQ) is positioned to grab big returns.
As many shoppers are heading to the Net instead of the mall companies have developed quick downloadable websites. A recent study from Zona Research concluded that US$4.4 billion per year in e-commerce sales in the U.S. may be lost due to unacceptable download speeds and the resulting user abandonment of online transactions.
According to Keynote, an Internet performance authority, early holiday e-shoppers in the first week of November experienced average web-site performance less than 16.0 seconds on Barnes & Noble at home. Since Barnesandnoble.com's debut in May, investors have seen little price movement in the stock. Expect a robust rally in 2000 for Barnesandnoble.com. This remains an Aftermarket buy under US$20.50.
Do Foxes hibernate?
Fox Entertainment (Fox-NYSE) has moved little in share price since its IPO debut. We are marginally up in Taipan. The struggling Fox Network produced a week new fall line up and saw its audience drop. But hopefully all that will change with the newly appointed Chairman of Fox television Entertainment Group, Sandy Grushow.
In the late 1980s and early 1990s as Fox TV's executive, Grushow helped launch hit series for the network including The X-Files and Beverly Hills 90210.
He left Fox but returned in January 1997 as president of Twentieth Century Fox Television. During his tenure, the company has become a leader in network TV production with 20 series on the air, including The Practice and Buffy the Vampire Slayer.
When Fox first filed to go public the company had no Internet ventures, but now the Fox Foundry, a unit of Fox Television Studios (FOX-NYSE) that aims to be a type of incubator for converging Web and TV entertainment businesses, was created.
Fox Foundry, headed by Fox Vice President of Business Development Tom Smuts, will take the entertainment assets of News Corporation (NWS-NYSE) (Fox's parent company), hire senior executives from the TV industry, mix in e-commerce knowledge from Silicon Valley, and build new cross-media ventures.
If Fox Foundry projects are successful online, then the studios will migrate them to cable or even network television. Analysts believe that the Fox Foundry may be just what the company needs to help boost its Internet strategy. If you like a long term investment, Fox remains a buy under US$23.
Time to sell
Tibco Software Inc. (TIBX-NASDAQ) has expanded its existing ties with Oracle to use Tibco's real-time publishing technology in new Oracle database and customer management software.
The expanded alliance includes a plan by Oracle to set up computer consulting practice to design and install systems using Tibco's software products, linked to Oracle's AQ database front-office and back-office business computer systems.
Tibco products also will be integrated into the Oracle Applications suite of products as an underlying technology.
With a reiteration of a buy by Alex Brown and a robust rally in Tech stocks, Tibco saw its share price soar from US$39.00 at the beginning of November to US81.00 by mid November. Tibco was recommended a sell at US$35.00 in the Taipan November issue and by the time the issue hit, Taipan saw IPO gains from anywhere between 233% to 660% and an Aftermarket gain between 46% to 238%.
What to Buy at What Price
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Siu Yee Ng now writes a weekly IPO column on this site. Check it out for previews of upcoming IPOs, weekly picks, and a Friday afternoon wrap-up.
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