Investology

Internet Capital Group (NASDAQ: ICGE) is a venture capital Internet holding company focusing on companies that are actively engaged in business-to-business (B2B) e-commerce. ICGE has large stakes in several prominent emerging B2B companies, - VerticalNet (NASDAQ: VERT), Breakaway Solutions (NASDAQ: BWAY), and US Interactive (NASDAQ: USIX).

ICGE went public on Aug 5/1999, and has done extremely well, up over 1300% from its original offering price of $12 per share. With the company recently receiving a $50 million investment from AT&T as well as a $50 million investment from Ford Motor Company, the venture capital Internet incubator firm that specializes in the B2B sector is possibly the best play in the year 2000.

At $121.875, ICGE is 43% off its year high of $US212, and has started to look very attractive

CMGI (NASDAQ: CMGI) is a venture capital Internet holding company that primarily focuses on emerging Internet companies. Although CMGI is perhaps best known for its highly acclaimed spin-offs of Internet companies such as Lycos (NASDAQ: LCOS) and Geocities [acquired by Yahoo! (NASDAQ: YHOO)], the company also owns large stakes in several publicly traded companies, including Chemdex (NASDAQ: CMDX), Silknet Software (NASDAQ: SILK), Engage Technologies (NASDAQ: ENGA), and recent IPO NaviSite (NASDAQ: NAVI). A stellar performer that was up over 800% in 1999, CMGI continues to amaze investors with its revenue growth and recent acquisitions.

CEO David Wetherell predicts that CMGI will surpass Yahoo! in revenues by 2nd quarter of 2000. With AltaVista going public this Spring, CMGI looks to have yet another wildly impressive year. The founder and CEO David Wetherell is a pioneer of the Net space and has yet to slow down. For example, he has been using CMGI stock as an effective tool to build assets, buying such companies as Flycast Communications for $690 million and AdForce for $500 million. CMGI also has interests in Engage Technologies and AdSmart. In short order, Wetherell has built an online advertising powerhouse that rivals DoubleClick.

Sure, the stock price has had a great run. But expect much more of the same for the new year. The company is a Net powerhouse and has investments in a myriad of hot Net companies that will hit NASDAQ. Companies include bizbuyer.com, AuctionWatch, Furniture.com, FindLaw, Visto and on and on.

The company recently announced that it has established a B2B fund. The fund will have $1 billion to play with.

MP3.com (MPPP): The music industry -- which has been resistant to change for decades -- is finally coming under much pressure, led primarily from MP3.com. The company is becoming the platform for online music, a true music service provider (MSP). The MP3.com model is a direct attack on the music industry. MP3.com allows artists to post their music and then split gross revenues 50-50. The traditional model is to give the artist a measly 8 percent to 10 percent.

So, it is no surprise that MP3.com has more than 250,000 tracks (from 40,000 artists). Moreover, a variety of major artists have signed on, such as TLC, Alanis Morissette and the Goo Goo Dolls. MP3.com has been leveraging its base. For example, the company recently added greeting cards. Or, there was the acquisition yesterday of SeeUThere.com, which will allow event planning and ticketing.

In the new year, MP3.com should continue to have strong growth numbers, as well as many new artists that sign-on. The IPO was priced at $28 and surged beyond $100 per share. However, the stock is now at $35. Actually, I think the company represents the best Net value play.

Visitors to its site can download the songs for free and buy CDs and other merchandise from the artists. The company is named after the popular digital music encoding format, MP3, which compresses songs down to a fraction of their former size so they can be sent quickly over the Internet while preserving near-CD quality sound. The company does not, however, own the rights to the technology.

The recording industry has balked at embracing the format because of its lack of copy protection, fearing it will make it easier for pirates to distribute instantly thousands of near- perfect digital copies of their most valuable hits.

mPhase Technologies, Inc. (OTC BB: XDSL), is an emerging company developing a product called the Traverser which enables voice, high-speed Internet access, and 400 channels of digital television over the existing copper telephone wires. The system is currently being tested by a number of local telephone companies in the US and is also undergoing trial in Mexico by Telmex. The product will be available commercially by midyear 2000. The stock was up 150% in 1999 as interest in the company’s next generation products develops.

mPhase's TRAVERSER will enable telephone companies to compete with broadband carriers in the emerging high-speed Internet access market by providing an all-in-one communications solution. The TRAVERSER uses Rate Adaptive Digital Subscriber Line (RADSL) technology to enable telephone companies to simultaneously transmit high-speed Internet access, up to 400 channels of digital television programming and traditional voice services. This approach maximizes a telco's substantial investment in existing copper telephone wires.

The TRAVERSER also opens new revenue streams for telcos by enabling them to provide new types of enhanced services like digital ad insertion, e-commerce and Internet advertising.

In Jan 1999, when this company was trading at $2 ($51.2M market value), I notified the CEO of a Fortune 500 telco vendor with reasons why I thought it would be a good fit for his company to acquire it. He asked his experts in broadband and bandwidth issues who promptly turned it down. I guess I was vindicated when Nortel acquired the number 2 company in that niche for over $US750M in late 1999 and mPhase catapulted to over $19 last week.

HealthAxis Inc - HealthAxis, Inc, formally Provident American Corporation, is the holding company for HealthAxis.com, an Internet distributor of health and life insurance to individuals and small groups. HealthAxis.com does not engage in insurance underwriting or assume underwriting risk. Through its interactive Web site, http://www.healthaxis.com, customers can purchase a full range of insurance products and services. HealthAxis.com carrier partners include Aetna, CIGNA, WellPoint and others. HealthAxis.com recently signed a definitive agreement to merge with Insurdata Incorporated, a provider of Internet-based plan administration services to healthcare Payors. Upon the closing of the transaction, scheduled for January 2000, the combined company will provide Web-enabled services to both consumers and Payors of health insurance. Health Axis.com investors include Intel Corporation, America Online and First Health Corporation.