Internet Investors Expand Their Horizons

Article excerpt

Much of the sizzle from Internet stocks is the sound of a burning fuse.

The stock of online retailer, for instance, has ballooned 10-fold in the past year even though it has yet to make a dime.

"The stocks have always seemed outrageously expensive, and they are arguably the most expensive stocks in history," says Henry Blodget, Internet analyst at CIBC Oppenheimer in New York. Although the sector could soon confront a correction ranging from 30 percent to 60 percent, Mr. Blodget remains extremely optimistic for the long term. And he thinks he's found a comparatively stable seat on the Internet rocket. Investors, he says, can turn to well-established companies with robust profits that are embracing the Internet, but don't exist only in cyberspace. Unlike pure Internet firms, they are just wildly priced instead of insanely so. They offer investors plenty of bang with far less burn. "It pays to identify the companies that will capitalize on the Internet and be there first," says Paul Cook, lead manager of the Munder NetNet fund, one of a handful of mutual funds that have sprung up specializing in these companies. Mr. Cook raised eyebrows several months ago by buying Charles Schwab as an Internet play. But since then the stock has soared, in large part because it now does some 60 percent of its transactions online. "We're putting our money to work in the more stable, mature tiers because the less mature companies are so highly valued," says Lawrence York, lead portfolio manager of the WWW.InternetFund in Lexington, Ky. About one-third of his Internet mutual fund is devoted to large, highly profitable firms with at least part of their business related to cyberspace. Established businesses jumping headlong to the Web range from telecommunications and personal computers, to retailing and shipping. The variety testifies to the way in which the Internet will transform how virtually all industries operate. Big Web prowlers One such blue chip is Disney. The entertainment giant plans soon to launch the Go Network, a new Internet portal that will offer a full range of services, from e-mail to value-added offerings like travel services. …


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