Emap’s Net news fails to impress weary City

This week’s stock market review

Last week, UK magazine group Emap announced plans to spend £250m on building
Internet ventures over the next three years, with the first tranche of £75m to
be spent this year. The company is optimistic that its proposed on-line
strategy will increase its revenues stream significantly.

The key part of Emap’s proposals is investing in wholly-owned digital
businesses, as well as pursuing joint ventures. It also plans to buy related
Internet businesses.

But the announcement failed to impress the City and Emap’s stock price fell
sharply. It is obvious that many analysts are becoming weary of media companies
announcing their Web strategies.

Freeserve shows strong growth but still has some way to go

Freeserve has been trying hard to recover from its recent difficulties
following the decision by its US rivals Alta Vista and NTL to cut their
Internet access charges. The company last week served a surprisingly good set
of revenue figures to market analysts. It also revealed an increase in the
number of its service users.

The 36 per cent rise in revenues for the third quarter to January suggests
that Freeserve may have a few aces to serve at its competitors.

Freeserve’s active users are fast approaching two million but many analysts
remain cautious about the company’s prospects. Although it remains the UK’s
largest Internet provider, it is clearly not out of the woods yet since its
stock price suffered huge setbacks recently over fears that many of its
customers might be lured away by price-cutting rivals.

The City is becoming less bullish on the stock, mindful that the advent of
cheaper phone charges may prolong the date when Freeserve will become
profitable.

"New economy" stocks are losing their lustre

Evidence is emerging that investors are getting cold feet about "new
economy" stocks. Many dot.com stocks are coming under pressure as a
growing number of investors switch back to the tried and tested old economy
stocks, particularly in the banking sector.

Much of the gains achieved by the FTSE 100 last week came from value stocks
that are traditionally regarded as safe bets. And the Dow Jones Industrial
Average recorded its single highest one-day rise, when it clocked up 500 points
on Thursday, due largely to good performance of old economy stocks.

Winners and losers in London

Last week some of the biggest casualties in London were Kingston
Communications, Sage and WPP. BP Amoco and Royal & Sun Alliance were among
the best performers. BP Amoco’s strong performance was on the back of high oil
prices and news that it has cleared the final hurdle to its $27bn takeover of
Arco of the US.

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