From Diana J. Choyce
It will certainly be an
exciting and confusing year for investors and companies alike
Jan 24 - , 2000
If consumers were confused about where to invest their money last year,
this year will likely be even worse. It's not that investors aren't making money, there
appears to be plenty to go around. But the Internet is such a volatile entity, that the
task of choosing which stocks to go with will be daunting. Right now there are over 350
companies positioning themselves for a run in the market. Takeovers and mergers are
escalating at an incredible pace. And there is heavy investment trust in companies that
are still in the red. It should be an interesting year.
Starting off the year was the announcement of a history making company
merger. And what a surprise, it involves AOL.
Their recent $350 billion dollar stock merger with world's largest
media and entertainment company, Time Warner Inc., is the talk of the Internet and
everywhere else too. Their plan is to create the world's first fully integrated media and
communications company. Combined, the companies boast more than $30 billion in revenues
and 80,000 employees.
If the deal passes regulatory muster, it will provide AOL shareholders
with about 55 percent and Time Warners shareholders about a 45 percent stock holding. The
new company, AOL Time Warner will hold some of the biggest brands in history including
AOL, Time, CNN, CompuServe, Warner Bros., Netscape, Sports Illustrated, People, HBO, ICQ,
AOL Instant Messenger, AOL MovieFone, TBS, TNT, Cartoon Network, Digital City, Warner
Music Group, Spinner, Winamp, Fortune, AOL.COM, Entertainment Weekly and Looney Tunes.
This merger is expected to have a major impact on Internet and e-commerce services.
AOL has just come from a very profitable holiday season. It's members
spent more than $2.5 billion in on-line shopping. That amount is more than 60 percent of
the over $4 billion that is predicted to have been spent on-line, by all shoppers. This is
a big payoff for a company that spent 1999 snatching up mergers and alliances in its AOL
Everywhere campaign. And it would appear it did a good job spidering into many facets of
the Internet and making itself a very scalable company. In October it forged an $800
million dollar deal with the number one computer retail giant Gateway Computers. In
September it was a $20 million dollar deal with musicmaker.com to sell personalized CD
compilations and downloadable music. January 1999 saw a deal with the very popular Dragon
Systems to develop and deploy speech recognition for Internet use. In September it inked a
$33 million deal with Medscape to give exposure to their health and medical information to
consumers. March saw it invest in SBC to offer DSL high speed Internet connections to its
AOL users. And it made a $75 million dollar alliance with eBay to further eBay's exposure
to AOL's members. And on and on it seems to go. AOL is now considered the number one
portal for e-commerce purchase referrals. Based on their activity, strength of market, and
scalability I would suspect investing in AOL is a pretty safe bet for continuing profits.
There are several other companies to watch this year, despite the fact
that most eyes are on AOL. Interactive Week Magazine, a well respected Internet watcher,
says that these companies are most likely to make us sit up and take notice. Bizrate.com,
which started its Internet life as a small e-tailer has grown into a superior consumer
portal. It has a reputation for unbiased consumer shopping information, due to its
"no pay" policy in reviewing on-line retailers. It also collects direct feedback
from millions of actual customers to help assess each store that it highlights. Their
website boasts that " We don't allow stores to pay for listing or placement in our
site and we don't accept sponsorships. Instead, we generate our revenues by helping
consumers buy on-line and by helping stores study and better understand how to serve the
needs of consumers buying on-line".
Charter Communications is owned by Paul Allen who was also the
co-founder of Microsoft. It provides advanced cable networking and services. Charter's
recent acquisitions of several cable companies and alliances with AT&T, HSA (High
Speed Access) and General Instrument put it in a very good position for the coming year.
At present they are the 4th largest operators of cable television systems in the US. They
have also begun introducing interactive video programming, high speed Internet access, and
telephony services. Allen's vision is a "wired world", where "everyone
would have a PC at home and at work that would be interconnected within a global network.
This network would provide immediate availability to information and resources anywhere in
Merrill Lynch & Co. has for years delayed entry into the Internet
due to its conventional brokers and general ideals for doing business the "old
fashioned way". In their quest to make a run at Schwab and E*rade, they formed an
alliance in December with Multex.com. They expect to jointly develop next-generation
platforms for real-time delivery of investment strategy and securities research. And they
are developing personalized real-time research alerts and market information across
multiple platforms, such as pagers, cell phones and the Internet. On the home services
front, Replay TV and TiVo have formed a partnership they hope will beat interactive cable
services into the home. Via an advanced video cassette recorder box, they have created an
product which gives the consumer almost total control over what and when they watch on TV
programming. Their "team" boasts such high profile and experienced companies as
Palm, Macromedia, NeXT, InfoSeek, Disney, LucasArts and 3DO. And they have filed over 120
patent claims they hope will secure their state of the art interactive services.
It will certainly be an exciting and confusing year for investors and
companies alike. The majority of companies will either falter by the wayside or be
swallowed up by larger companies. So the key to investment profits will likely be through
tireless research, timing and just plain good luck. Playing in the stock market this year
will not be for the fainthearted or timid investor. But one expects it will be great fun.