Internet Update
Dateline: 07/12/99
There are now 70 stocks on my combined Internet indices - 42 on the Canadian Internet Stock Average, 17 on the Metamorphosis Index and 11 on the Yankee Index. And again, there were large number that fluctuated more than ten percent during the week. Last week I just listed gainers, but this week I've included the decliners as well. In fact, this chart of movers and shakers will be a regular Monday feature as of today.
| Stock | July 2 | July 9 | % Change |
| Dejour Mines | 0.31 | 0.48 | +54.8 % |
| IGN Internet Global Network | 1.15 | 1.71 | +48.7 % |
| Topclick International | 2.12 | 2.81 | +32.5 % |
| EcomPark | 1.00 | 1.31 | +31.0 % |
| Microforum | 5.80 | 7.50 | +29.3 % |
| SCS Solars Computing Systems | 1.02 | 1.22 | +19.6 % |
| MedEra Life Sciences | 4.00 | 4.75 | +18.7 % |
| Travelbybus.com | 0.48 | 0.55 | +14.6 % |
| Rogers Communications | 25.80 | 29.55 | +14.5 % |
| Global Media | 6.06 | 6.88 | +13.5 % |
| Planet411.com | 3.38 | 3.78 | +11.8 % |
| Cybersurf | 2.70 | 3.00 | +11.1 % |
| Realm Corporation | 0.50 | 0.45 | -10.0 % |
| Victory Ventures | 0.70 | 0.63 | -10.0 % |
| Entrust Technologies | 31.63 | 28.06 | -11.3 % |
| Softnet Industries | 0.59 | 0.50 | -15.3 % |
| Sikaman Gold Resources | 0.26 | 0.21 | -19.2 % |
| Millenium Network Corporation | 0.72 | 0.58 | -19.4 % |
| Cornucopia Resources | 0.19 | 0.12 | - 36.8 % |
Of the 70 stocks charted, fully 19 of them moved 10% or more during the week - 12 gainers and 7 in retreat. Interestingly enough, two of the top three gainers reported last week are among the decliners this week, with Cornucopia Resources, last week's biggest gainer being this week's biggest loser.
The cause of Cornucopia's decline is a snafu involving the change of name and stock listing. The company has changed its name to Stockscape.com but the change of stock symbol which was to take effect last Tuesday got derailed.
The stock was supposed to consolidate on a ten for one basis and trade as STKSF but as the company noted in a Press Release Tuesday, "its shares were called for trading on the OTC Bulletin Board on July 6, 1999 under the STKSF symbol. The OTC Bulletin Board has been advised that this was premature, and has confirmed that trading will continue under the symbol CNPGF until they are instructed that the company's name change and share consolidation have been made effective."
The market doesn't like confusion or screwups and punished the stock accordingly. We'll keep watching it.
The top gainer was Dejour Mines, one of our Metamorphosis stocks that struck gold by changing to an Internet stock. I could find no news on the company for the week so I don't know why the price jumped as much as it did. IGN Internet Global Network, the company that designed and licenses Casinos of the World, was a close second, but again, no news to explain the jump. Could be because people are recognizing that IGN has the lowest valuation compared to other Internet gaming stocks. Before this week it was the only stock on my Gaming Sub-Index to show a loss of share price since January 1st.
The interesting stocks from our perspective are Microforum and Rogers Communications.
Microforum - According to their own info on their website, Microforum "is an e-commerce applications, content, technology service corporation providing a broad range of e-commerce, creative and database marketing services to a list of recognized North American-based clients". In plain English, they help other companies get involved in e-commerce.
The stock has been followed extensively by newsletter writer Bill Ridley of The Inner Circle. He was recommending the stock back in January when I ran across his newsletter at the Vancouver Investment Conference. In his January 30th edition he noted that Microforum's third quarter report was in and showed a 625% increase in revenues over the previous third quarter. Moreover, this was the third consecutive large increase in sales as Q1 results had been up 310% and Q2 up 576%.
At the time Microforum had just had a good runup from $1.15 at the New Year to $1.90. Canaccord's David Wong had just warned that there could be a pullback. And indeed, the stock drifted for several months.
In early April Microforum announced that it had been invited to sit on Microsoft's Commerce Partner Advisory Council, one of only 25 companies invited to participate. On that note, Canaccord's Wong reiterated his buy recommendation of April 1st when the price was $1.35 a share. It was then $2.35. By month end it had soared to $12.
The stock then consolidated around the $6 mark, but analysts believe there is plenty of upside to this exceptionally strong company. In a July 5th interview with Stockhouse.com, Wong discussed the company's recent contract to set up a credit approval network for National Bank. This has high margin potential as the company will get a piece of every bank transaction using the system. In fact, Wong talked of the possibility of Microforum and National Bank's product being adopted by banks worldwide.
Wong said his target price for Microforum twelve months out is $11. Last week the stock gained 29.3% but is still well under that target price at Friday's close of $7.50. Driving the surge - speculation about earnings growth (Q1 results soon to be released), the company's intent to list on the NASDAQ, and an announcement that the company was looking at three potential e-commerce related acquisitions
Rogers Communications - Rogers, Canada's largest cable television company, jumped 14.5% this week on speculation that Microsoft may invest in the company. Fueling the speculation is the fact that Ted Rogers was one of the few Canadians who attended a recent Seattle conference for chief executives hosted by Bill Gates. Microsoft has previously invested in cable in the U.S. with a billion dollar stake in Comcast Corporation.
Microsoft's interest in cable is a natural result of convergence - the ultimate union of computers and television broadcasting. The increasing popularity of the @Home service for Internet access is just the beginning. Rogers is one of the Canadian licensees for @Home.
Microsoft is interested in developing the software that will be used to drive the set-top boxes that decode digital signals. Rogers is part of the Cable-Labs consortium that is working on developing standards, a consortium that includes such giants as Time-Warner, Cox Communications, TCI Communications, Continental Cablevision and Comcast. The consortium has met with Mr. Gates to discuss issues.
Despite its far-flung empire - cable systems, wireless technology and print and broadcast media, Rogers has not always been profitable. Although it had the ninth largest profits in 1998 at $634,769,000 according to the Financial Post 500, it lost almost that much the previous year. It topped the list for turnarounds in profitability and Rogers share price has grown accordingly. It's up 116.5% since January 1st, the best showing of any cable company. Rogers is the 59th largest company in Canada by revenue.
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Microsoft Rumours Boost Rogers - July 10, 1999 National Post report on Rogers share price increase.
Bill & Ted's Excellent Adventure - More on the Microsoft-Rogers connection from the National Post.
Microforum Makes a Comeback - July 6, 1999 National Post report on the sudden rise in Microforum shares.
Canadian Internet Stock Average - Updated with Friday's prices. Two new stocks added - SCS Solars and Chartwell Technologies.
Metamorphosis Index - Prices updated.
Yankee Index - Two new stocks added - Online Production Services and Promark Software (soon to be ClipClop.com)
Internet Stocks Net Links - A new category of Net Links added during the past week. Check it out!
07/09/99 - Trading
on Volatility: Case Study # 2 - Microsoft
Our second case study into active trading of a particular stock
gives quite different results than our first one did.
07/07/99 - Trading
on Volatility: Case Study # 1 - Barrick Gold
We try out a method of trading stocks based on their fluctuations
from recent highs and lows to see if it will improve our profits.
07/05/99 - Internet
Update: Recent High Flyers
Ten stocks on our Internet indexes gained over 10% last week. We
profile two of them and take a look at Nortel Networks as well.
07/02/99 - Volatility
Can Be Your Friend
In theory, you can make more money trading
stocks than using a buy and hold strategy. But deciding when to
buy and sell - ah! There's the rub!
06/30/99 - Saving
Canadian Hockey
Does Canadian hockey need a government bailout to stay viable?
Why help just hockey with tax relief? Why not simply abolish the
corporate income tax for all businesses?
Disclosure: The author owns shares in Cornucopia Resources/Stockscape Technologies and in Microforum.
Canadian Mutual Fund Database - 21 more fund companies added to the database bringing the total now to 55 companies.
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