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PUBLISHER’S LETTER
www.siliconchip.com.au
Publisher & Editor-in-Chief
Leo Simpson, B.Bus., FAICD
Production Manager
Greg Swain, B.Sc.(Hons.)
Technical Staff
John Clarke, B.E.(Elec.)
Peter Smith
Ross Tester
Rick Walters
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Louis Challis
Rodney Champness
Garry Cratt, VK2YBX
Julian Edgar, Dip.T.(Sec.), B.Ed
Mike Sheriff, B.Sc, VK2YFK
Philip Watson, MIREE, VK2ZPW
Bob Young
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ISSN 1030-2662
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4 Silicon Chip
Internet companies an
unknown quantity
Anyone who follows the sharemarket cannot fail to be amazed at what is happening to
company valuations, depending on whether
they are perceived to have an internet strategy
or not. And even companies which are not
internet-based, such as media companies, can
also get a huge lift, because they are perceived
as being sources of “internet content”. And it
seems that every time a big conventional company such as a major retailer, bank, developer
or whatever announces a big profit lift, their
share prices tend to go down rather than up.
While if an internet company announces a loss
(as they generally do) their prices tend to rise.
Frankly, I am as baffled by the whole process as anyone else. It seems crazy to
me that a company such as Ecorp, which is really not much more than a ticketing agency and a discount broker and has yet to make any money, has a bigger
market capitalisation than say, the giant construction firm Leighton Holdings.
Or that Sausage Software should be more highly valued than Caltex which has
real refineries, service stations and so on.
It seems as though large companies which actually make goods or provide
services are no longer valued as they should be. Not that this is confined to
Australia; it is a world-wide trend at the moment.
The pundits put it down to the fact that the internet is seen to be the way of
the future and that those internet companies which are making the running now
and building a large customer base, are the ones that will be positioned to make
big profits in the future. This may well be so but many of those internet type
companies which are losing money in really large amounts right now probably
won’t exist in a few years time.
In fact it appears that the only internet companies which are presently making
any money are those that provide pornography or financial services; interesting
juxtaposition, that.
And while people can now buy all sorts of goods via the internet it does seem
as though it will be a while before a major portion of retail sales becomes netbased. There are problems with deliveries and people still do like to inspect
goods before they buy, in most cases.
So where will the boom in internet business come from? It beats me. If I had
any really worthwhile ideas on the subject I’d be out there hustling along with
all the others. For example, SILICON CHIP could make all its editorial content
available on the net as well as all sorts of related electronics information but
it would seem unlikely that enough people would be prepared to pay for the
services we could provide. It would certainly cost a heap of money to set up.
Ask yourself the question: would I be prepared to pay something like $50 to
$100 a year for wide-ranging access to SILICON CHIP material? If enough of you
answered yes (and are prepared to tell us that) we might have a good chance of
doing it. If not, then as far as we at SILICON CHIP and a great many other companies are concerned, the internet will remain a tantalising vortex, sucking in
huge numbers of people and vast quantities of money.
That is not to say that the internet itself is useless. We use it all the time and
our activities on the internet will naturally continue to grow. And email is quickly
replacing conventional mail and fax as the standard means of communication
to SILICON CHIP. Just look at all the letters in “Ask Silicon Chip” which come in
via email now.
For the moment though, the internet remains enigmatic. For those companies
and organisations who figure it out, the rewards will be large.
Leo Simpson
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