INVESTMENT FOR 2000
From Diana J. ChoyceIt 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 the world".
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.