Forum Archive Index - October 2000

["Peter Maiden" <pmaiden@today.com.au>]

The decline in the value of tech stocks and dot.coms around the world is the 
realisation that expectations (based on lot of hype) won't be met.

Dot went wrong

The world should eliminate the 'e' prefix. 

What were once e-things are now the norm. Commerce has evolved (sorry - an e 
world) over the past few years to the extent that the new way way of doing 
things is to use the latest technology to deliver product to market.

Even boring 'old economy' listed companies have embraced this new technology, 
without much hype. To name just three instances - CAH (carters.co.nz) , WRI 
(wrightson.co.nz) and WHS (thewarehouse.co.nz). All three sell products on line 
to their customers. Yes you can buy paint from Carters, a 2 drawer filing 
cabinet from Warehouse and dog biscuits from Wrightsons. There shop fronts are 
world class and they have done a fantastic job  in setting them up. Even though 
these shopfronts are another channel to market and do complement their own 
physical stores these three have recognised that future shopping trends will be 
different from today. Maybe BDO and flyingpig.co.nz were  just too early to 
market and didn't have a brand and physical presence in High ST to support them 
- very likely their time will come.

RNS is a company that has evolved by the use of technology. They have not only 
made their marginal distribution business profitable but bundled up the 
intellectual property that created the turnaround and marketing to the world.

Of course many others use the new technology  (AMP,  AIR , BCH  etc)  to 
transact business and add value to their companies.

Where does that leave the so called listed tech companies (ADV, SMR etc). 

These need to be grouped into two categories. I feel that in the hype we need 
to treat the different categories differently when we consider the value in 
these companies.

One group are those that have become the service and expertise providers to 
businesses around the world. There are many of these companies and the market 
is becoming very competitive. Even though bringing  new ways of doing things to 
the business world and all very exciting one shouldn't expect astronomical 
returns in the future. IMHO a lot of the companies that ADV and SMR have an 
interest in are in this group

The second group are those that are actually creating something innovative (new 
and exciting). Those are the companies where big returns can be made on a 
successful venture and as such are more speculative - eg some of ITC 
investments. 

What I am saying is that (in NZ) we are possibility seeing the real value of 
companies being reflected in their current share prices. Look at the charts and 
draw a line from early 1999  to the current price ( ignoring the crazy times 
early 2000) and all this makes sense.

Only time will tell what happens to individual companies but the current trends 
in most companies is reflecting their true worth.  Look at some - the story is 
pretty compelling.

Trend in the investing world is towards focusing on companies with real profits 
and sensible business models, Investors want sensible stocks at sensible prices.

You will note that I have left telco's out of the argument. That's another 
story.

Look forward to feedback

Peter

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