INTERNET STOCK NEWS[tm]
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Internet Stock News Outlook 1/31/2002: EBAY: GAVELS AND GUNS
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What EBay needs is a war chest and it builds one, too. The company
has new, higher action fees from today, January 31. EBay's
guidance for the upcoming Q1 and Q2 2002 is for revenues of $500
million which translates into a modest 7% quarterly revenue
increase. If analysts have got it right, the fee hike only will
bring a 10% revenue gain in Q2.

The money aren't needed so much for technical upgrades. EBay
bought another StorEdge 9900, but Sun (SUNW) cut prices on those
in November. What is the real money-burner for EBay is its R&D,
marketing and administrative expenses which in 2001 were more than
EBay's total revenues for 2000.

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It is true that EBay's revenue growth in the past twelve months
more than offsets the expenses increase. Revenues grew by 74%,
while R&D, marketing and administrative costs grew by 46%. The
broad consensus, however, is that EBay's investors will have to
get used to much lower growth rates in the quarters and years to
come. And those growth rates may be further challenged by nothing
else but EBay's own success.

EBay created a business phenomenon which has become much too sweet
to be ignored by the larger and hungrier players in the Internet
field. EBay's success was also very cheap - the company has only
$12 million long-term debt - less than a half of its last
quarter's net income. Amazon.com (AMZN) owes more than $2 billion.
EBay doesn't have an unprofitable year since 1997. The top line is
even hotter - in 2001, EBay's $749 million revenues surpassed
those of Yahoo (YHOO) - $717 million.

The question the big on-line players are asking now is no longer
how EBay did it, but how can they replicate this success under
their own portals.
Furthermore, the main cited reason for Yahoo's declining business
was the fall in advertising rates, but those would never fall if
Yahoo continued to be a portal monopoly.

EBay as an undisputed leader in on-line auctioning still has the
comfort to increase its fees. But EBay knows it can't be done too
much or too often. So far, EBay managed to crush aspiring
auctioneers like FairMarket (FAIM). FairMarket finally brought its
business to EBay, but it also brought it to Microsoft. Microsoft's
auctions are conducted through the fairmarket.msn.com Web site.

EBay will no longer expand without meeting more of the big ones on
its path. Its last deal with Sotheby's (BID) is an example. It
comes months after  sothebys.amazon.com was up and running. Yahoo
also is hardly comfortable being eclipsed by EBay which started as
a Web site for collectors of PEZ candy dispensers.

EBay will sooner or later face a serious challenge on its turf.
And for that it needs a sizeable war chest. For companies that are
both smart and lucky always have times when they have to prove
that they are strong, too.


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ISN tracks the performance of companies with products or services
influencing the development of the Internet as a market. The list
will be continuously revised and updated.


Name (Ticker)                                   Stock Price
                                               (% Change 2002)
-------------------------------------------------------------
MarketWatch.com, Inc. (MKTW)                         31%
Multex.com, Inc. (MLTX)                              30%
barnesandnoble.com inc. (BNBN)                       30%
LookSmart, Ltd. (LOOK)                               28%
Amazon.com, Inc. (AMZN)                              27%
eUniverse, Inc. (EUNI)                               17%
Hoover's, Inc. (HOOV)                                13%
priceline.com Incorporated (PCLN)                     3%
Global Sources Ltd. (GSOL)                            2%
WebEx Communications, Inc. (WEBX)                     1%
FTD.COM INC. (EFTD)                                  -1%
FreeMarkets, Inc. (FMKT)                             -6%
Microsoft Corporation (MSFT)                         -6%
DoubleClick Inc. (DCLK)                              -6%
Comcast Corporation (CMCSK)                          -7%
Yahoo! Inc. (YHOO)                                   -8%
Travelocity.com Inc. (TVLY)                          -8%
SBC Communications, Inc. (SBC)                       -8%
TMP Worldwide, Inc. (TMPW)                          -10%
E*TRADE Group, Inc. (ET)                            -12%
eBay Inc. (EBAY)                                    -13%
Sun Microsystems, Inc. (SUNW)                       -16%
VeriSign, Inc. (VRSN)                               -17%
Check Point Software Technologies Ltd. (CHKP)       -17%
Akamai Technologies, Inc. (AKAM)                    -21%
1-800-FLOWERS.COM, Inc. (FLWS)                      -22%
AOL Time Warner, Inc. (AOL)                         -23%
VerticalNet, Inc. (VERT)                            -24%
Homestore.com, Inc. (HOMS)                          -35%
McAfee.com Corporation (MCAF)                       -42%
CNET Networks, Inc. (CNET)                          -42%


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INTERNET STOCK NEWS (ISN) (c) 2001
Disclaimer: The material herein is for informational
purposes only and should not be deemed an offer or
solicitation on our part with respect to the sale or
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