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2HRS2GO: Healtheon/WebMD talks itself higher

Weekend wanderings...

Healtheon/WebMD (Nasdaq: HLTH) got a boost after insiders Jim Clark and John Doerr said they'll spend up to $200 million and $20 million, respectively, for more HLTH stock. It's another way of saying "We like the company," but you already knew that.

You could laud Clark and Doerr for putting their money where their mouths are, except they haven't done it yet and may never do it to the full extent. Or didn't you notice the "up to" caveat?

Clark has always been good at talking up his companies. If only he was as skilled when it comes to building them into solid, long-term businesses.

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Healtheon seems to be doing well so far, but today's first quarter preannouncement is also a bit vague. A loss of "less than $90 million" just means the company lost less than 50 cents per share. We still don't know if the company is ahead of bottom line expectations, because First Call consensus already predicts a loss of 47 cents.

Sequential revenue growth of at least 88 percent -- to more than $62 million from $33 million in the December quarter -- looks outstanding on an absolute basis. It also looks good on a relative one: the six analysts cited in First Call's survey produced a consensus revenue forecast of $58 million for the first quarter.

Healtheon/WebMD's top line got a lift from large, multiyear agreements recently signed by News Corp., HealthStream, Medtronic, Quintiles Transnational, and Eli Lilly.

"This is the first full quarter in which we were able to reap the the benefits of those contracts," Healtheon/WebMD spokesman John Runningen says.

But some of those deals involved selling stakes of the company -- including at least one Healtheon acquisition that required the seller (Quintiles) to buy HLTH shares while Healtheon bought Quintiles stock in addition to acquiring a Quintiles unit -- meaning they fall into the category of extended equity investments rather than outright sales execution.

Nothing wrong with that, since money is money. But it doesn't indicate how the company is doing in the competitive marketplace.

Recall that Netscape and Silicon Graphics (NYSE: SGI) also started out well. We all know what happened eventually: Netscape didn't last five years on its own, and Silicon Graphics (NYSE: SGI) turned into the problem child it's been for the last several years.

Speaking of former Jim Clark companies, Netscape this week released the first preview version of its Navigator 6.0 browser. This is a column about businesses, not specific products, so I won't offer a detailed review. The short version: "It loads pages fast and I don't like the default user interface."

But that interface stimulated thoughts about business plans related to the browser. It now looks like a gray version of a client for Netscape's parent, America Online (NYSE: AOL), complete with slick designs; cute sans-serif fonts; big (BIG) buttons; a Taskbar at the bottom with menus for "Channels", "Shopping", "Tools", "Business", and "Free Time"; and a "My Sidebar" feature apparently designed for people who don't know how to use Bookmarks. The e-mail program has even more AOL-ish buttons, although it at least retains the 3-panel default setting.

Netscape may tout standards compliance and a speedy Gekko engine, but this thing gave the distinct impression of AOL trying to take over the look and feel of the Web, even for non-AOL subscribers. That shouldn't surprise anyone, since AOL has aimed to take over the Web for the last three or four years, but I'm a bit surprised it would use Mozilla as the vehicle -- open source's entire appeal is for people who generally despise everything AOL stands for.

Hardcore techies will be happy to edit Navigator's XUL files to create their own browser look and feel, but I don't see how the new Navigator will convince the rest of the non-AOL world to switch from Internet Explorer. Then again, maybe Netscape won't have to do any convincing -- I wouldn't be surprised if the new Navigator is being designed specifically as a replacement for IE as the default AOL browser, once the contract with Microsoft (Nasdaq: MSFT) runs out. It's certainly well-designed for delivering a panoply of ads.

Still seems like AOL paid an awful lot for what essentially amounted to another website and more software R&D for the AOL client.

If you're among those who lost a ton of money on (Nasdaq: QXLC) yesterday, look in the mirror for someone to blame. People who invest based on an analyst report they haven't read deserve everything they get.

Among the crate of IPOs hitting Wall Street today, online learning specialist Saba (Nasdaq: SABA) is soaring the highest so far. But if I had to choose among the new offerings -- thankfully I don't have to -- I'd take a gander at the other successful debutante, Numerical Technologies (Nasdaq: NMTC), whose software helps engineers design smaller chips that can be made using currently available manufacturing processes.

Numerical's revenue is rising rapidly, thanks to some top notch clients in Motorola (NYSE: MOT) Lucent (NYSE: LU) and Texas Instruments (NYSE: TXN). And it could accelerate as Web-enabled phones, Internet access pads, interactive TV appliances and all sorts of smaller gadgets start to proliferate. 22GO>