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2HRS2GO: GE can find successful e-commerce in seaminess

    It's too depressing to focus on today's action among Nasdaq stocks, so let your thoughts float randomly...



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    Today's Wall Street Journal has a fascinating piece on General Electric (NYSE: GE) using young employees to teach managers about the Internet.

    CEO Jack Welch ordered GE's top 600 executives to find an Internet mentor within the company. That usually means some up-and-coming whippersnapper. GE managers say they've learned a lot from their younger mentors. One honcho even bought airline tickets online. Wow.

    But if Welch's staffers want to truly understand e-commerce, they need to visit the pioneers. So come on, mentors, take your charges on a visit to the most prolific commercial websites: porn purveyors.

    They can teach GE the art of the Infinitely Looping Pop-Up Window. Show these managers how surreptitiously placed cookies fuel targeted e-mail campaigns. Demonstrate the benefits of secure commerce networks, a la Adult Check or other ID verification services. And learn to manipulate Inktomi (Nasdaq: INKT), AltaVista and other engines for optimal placement among search results.

    There's also no better way to demonstrate the possibilities of broadband. Want to see enhanced multimedia? Tommy and Pam's honeymoon video is just a few clicks away.

    How do I know this stuff? I, uh, read about it. Yup.

    Why Chordiant Software (Nasdaq: CHRD) and not VarsityBooks.com (Nasdaq: VSTY) or Savvis Communications (Nasdaq: SVVS)? The first stands as today's prize offering while the other two languish as IPO mutts.

    After all, a quick glance shows lakes of red ink for all three companies' financial statements. All play in highly competitive markets.

    But Chordiant gets the nod because online business infrastructure is all the rage these days. Chordiant's software automates sales, marketing and customer support -- in other words, it's Web-based CRM. People consider the success of a company like Siebel Systems (Nasdaq: SEBL), combine it with "Internet", and see a formula for e-commerce riches. A partnership with IT systems integrator and Super Bowl cat rustler Electronic Data Systems (NYSE: EDS) looks good on the resume.

    The fact that the relationship is non-exclusive won't deter anyone. The possibility of fierce competition from predecessors such as SilkNet Software (Nasdaq: SILK) and long-time CRM software stalwarts like Siebel, Vantive and Clarify doesn't bother would-be buyers. Losses exceeding revenue probably appeals to traders.

    IPOs simply don't trade on their prospectuses anymore. They trade on momentum catch phrases and solid backing from investment banks who can line up institutional buyers like dominoes. E-business software is hot, so Chordiant is hot. Internet backbones and other access services are lukewarm, so Savvis could command a price near the high end of its range, but not move much from there. And Web retail is just passe (especially books of any kind, textbooks or otherwise), so VarsityBooks has to settle below its range and even then barely stays afloat.

    If you're a Web content or retailer, find another exit strategy besides going public. The days of hype and roses are over for every new TomandDickdotcom.

    Applied Materials (Nasdaq: AMAT) reports earnings this afternoon. Prudential analyst John Pitzer anticipates strong news from the capital equipment maker, and he's probably right, judging by the raging demand reported by most semiconductor manufacturers.

    Question is, will the stock react strongly to good news? There seems to be at least a little bit of upside room -- shares are rising today but remain 13 points off the all-time high reached just last week.

    Michael Dell says the Internet will become as basic for business as electricity. Earth to Dell: have you seen the price growth of electric companies lately? Then again, he doesn't have to look far; his own stock over the past year has been performing like a utility, but without the quarterly payouts.

    It's a picture most Internet investors would rather not contemplate, but at the rate this market is maturing, the sector could start to see utility-like growth rates inside of two decades. Hope I'm fat and happy by then, or else I'll be yet another person clamoring for cash dividends in my golden years. 22GO>