2HRS2GO: Inktomi looks fine

3 min read

COMMENTARY -- Weekend ramblings:

  • Inktomi (Nasdaq: INKT)
  • shares dropped today following the company's third quarter report. INKT stock over the past week reached its lowest point since early December.

    Folks worry about growth over the next few quarters, especially as Inktomi absorbs FastForward Networks. Let the nervous nellies have their day; the reality is that Inktomi the company looks as solid as ever.

    Forward guidance from Inktomi executives remained bullish. Looking at the larger industry picture, outlook from JDS Uniphase (Nasdaq: JDSU) indicates high-speed optical network demand will continue to be strong. As long as that network buildout continues, demand for Inktomi's caching technology will be there.

  • Ingram Micro (NYSE: IM)
  • had a decent quarter, but that doesn't matter. Again, the outlook is what counts, and this technology distributor provides more reason for optimism, in the form of a forecast calling for fourth quarter revenue growth in the low double digits on a percentage basis.

    That's not bad considering Ingram generated revenue of $7.83 billion in the fourth quarte of last year. Ingram also continues to revive its gross margin.

    This morning's gains have brought IM stock nearly in-line with competitors such as Tech Data (Nasdaq: TECD). At its current price around 16, Ingram is valued at roughly 11.5 times estimated earnings for the next 12 months, compared to a forward multiple of 12.2 for TECD shares, which also gained ground today.

    Tech distribution generally has been a lousy sector for investing this year. But parts prices are falling now, margins are rising and demand looks reasonably healthy for 2001. Other industries would love to be in that kind of situation.

  • NBCi (Nasdaq: NBCI)
  • offers evidence that the market is trading purely on valuation today. The online media company posted a quarter during which sales fell short of some expectations as the company rejiggered its strategy.

    Yet investors decided to lift the stock by 21 percent, taking NBCi out of the penny stock realm. Considering NBCi still has an awful lot to prove, you'd have to conclude that people simply decided shares had been beaten up enough, regardless of what the future may hold.

  • Lycos (Nasdaq: LCOS)
  • shareholders approved their company's merger with Terra Networks (Nasdaq: TRRA). Talk about changing attitudes: last year CMGi (Nasdaq: CMGI) bailed on the USA Networks (Nasdaq: USAI) deal, mainly because its value plummeted as the market reacted.

    Now? Not even a 63 percent plunge is enough to dissuade folks from a merger. In other words, they ended up agreeing with Barry Diller's contention that Internet stocks deserved a far lower valuation than previously thought. Diller just happened to say it a year too early.

  • Speaking of which, Ticketmaster Online-Citysearch (Nasdaq: TMCS)
  • -- USA Networks' most visible Web property -- now is thinking about moving back in with its parents. Along the same lines, Barnesandnoble.com (Nasdaq: BNBN) just got a little closer to mother.

    That might be the biggest advantage that Old Economy offshoots have over their pure Internet counterparts -- the clicks-and-bricks guys can always return home. 22GO>