Full Circle Fool
...the Internet could lead us outdoors

by Jeff Fischer (JeffF@fool.com)

ALEXANDRIA, VA (Sept. 17, 1998) -- We're surrounded by a humorous world, as any Fool (and especially The Motley Fool) will be the first to remind you.

Had we ignored stocks for the past three weeks and reviewed them again now, we'd essentially find them at the same prices. The outcome hasn't changed, though stock prices changed every day. Zigging and zagging with the daily noise, over the past three weeks hundreds of financial columns have been written covering the constant movement of the stock market -- columns that are wrong by the next morning. Meanwhile, stocks came full circle, essentially going nowhere.

Today:

We won't dwell on it. The S&P continued to be volatile, dropping 2.5%. The Fool fared worse, declining 4.7%. Sometimes things look better from a distance, including the future. World markets were too optimistic and have needed to be reeled in and calmed.

The future:

"It's going to change the world forever and revolutionize it. Distances will no longer matter. We're all of one place now. Everyone can communicate instantly. This changes everything."

What changes everything? The Internet, of course.

But this was actually written to describe the telegraph in the 1800s. Later the same thing was said of the telephone. Next, the television was going to change the world profoundly, creating a newly civilized and educated populace, while entertaining everyone, too. Now the Internet is humanity's saving grace on a grandiose scale.

Last month a well-known technology magazine wrote that within our lifetime, five billion people will be online. Five billion people means 85% of the world's future population. Never mind that currently half the world's people have yet to make a single telephone call in their lives. That doesn't matter. Everyone will still be surfing Yahoo in a few decades. That's assuming that most people will simply skip that telephone invention and plug the latest Pentium machine into... something.

(If you live outside America, you probably tire of its hubris -- and its worship of technology.)

An age-old commodity made new:

Starbucks (Nasdaq: SBUX) opened its first Starbucks-branded store in London today, on King Street. The Starbucks here in Old Town Alexandria, whose roads are named after England, is on King Street as well. The circle of history is amusing.

In the early-1800s, immigrants to America developed cheaper ways to make candles and soap, finally becoming efficient enough that they could ship product back to the Motherland, England. Imagine England's surprise at first receiving competing products from the very land that its own people largely populated, whereas before England was the confident exporter of these goods to the Americans.

The motivation for Starbucks' espresso bar came from CEO Howard Schultz after he visited Milan in the early 1980s. Italy has had espresso bars on every street for 400 years. America had virtually none. After difficulties, Schultz was able to launch this "new" idea in America. Now Starbucks is entering Europe, the place of its origin.

The stock made a new 52-week low today and trades at 24 times 1999's projected earnings of $1.20 per share. Perhaps in a few short years the stock will make a new high, revisiting its "origin."

The Internet:

The Internet is revolutionary, but so is every major invention. The telegraph, the steam engine, electricity, the assembly line, the jet engine, radio, television...

The Internet will become another tool, hopefully much more useful and intelligent than television. The general online experience is superior to television by many measures, but it's still young. Where is it, in general, going?

Today an America Online (NYSE: AOL) press release read: "AOL and CBS join in unprecedented online promotion to launch the network's new fall schedule."

Yes, you can now go online to learn what's on CBS. The utility and convenience! (Ahem.) Of course, the Web does have incredibly useful information on it, but you can't force people to use it. Television has The Learning Channel, but NBC's sitcoms are the top draw and are given the most resources. And Wheel of Fortune is a favorite show in this country.

The Internet will seek advertising dollars and viewers by using an approach similar to television's, and it will direct resources in the same fashion. Too often, that means aiming for the lowest common denominator, the mass audience. Tools (and businesses) often deviate from their origin if it means growth by numbers. The Internet is an ideal example. It began as a tool for national defense and professional education. Now the end desire is conversion. Convert everything and everyone into a profitable dollar. Every click on the Web should bring pennies to someone. The more clicks the better. The Darwinian method of economics means evolve into a dollar sign, or disappear.

And use drives direction. Many people believe that the Internet was more interesting ten years ago, before great numbers of people used it. The more people who use the Internet, the more general and all-encompassing its direction becomes. There will always be gems online, however, because anyone can participate and all interests are addressed. Websites begun by 20-somethings in a basement can better those developed by corporate giants. And if you seek knowledge online, it's instantly found. Still, if mass communication was going to utterly change the life experience, it would have long ago. It's not a question of having a medium, it's a question of having a worthwhile message to share on it.

(Full circle again: the Internet will give us more time to seek what we'll miss because of technology -- the outdoor life, one of activity.)

"Inventing" comfort:

Lucent Technologies (NYSE: LU) told analysts that it was comfortable with 1998 earnings estimates of $1.70 per share and that it was confident of healthy growth going forward. The stock declined $4.

Hot topic:

Get it while it emits heat: 3Dfx (Nasdaq: TDFX) is still a hot topic. To continue to be a hot company, 3Dfx needs to consistently lead its computer graphics niche in the face of a technology melting pot. Technology has always aimed to make things simpler, more convenient, and less expensive. Putting enhanced graphic functions on a motherboard is intuitive. To be the chip used, 3Dfx needs to compete with Intel and a technology curve that will likely close the current performance gap.

Tonight's "Fool on the Hill" column offers an excellent look at the 3Dfx story. Also, this morning the Fool interviewed Greg Ballard, the CEO of 3Dfx. You can read highlights from the interview by clicking here, and the complete transcript will be available tomorrow.

The Year 2000 Bug:

Part four of the Fool's series on the Year 2000 Bug is published today. Enjoy...

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09/17/98 Close

Stock Change Bid ---------------- AMZN -7 45/64 76.80 AOL -4 13/16 97.56 T -1 57.31 DJT - 5/16 3.63 DD -2 1/4 58.38 XON -1 1/4 68.56 INVX + 1/4 10.75 IP - 7/8 43.63 IOM - 3/16 4.25 KLAC - 3/4 22.63 LU -4 1/4 72.25 SBUX -2 1/8 29.19 COMS -1 3/16 29.56 TDFX - 1/16 9.13
Day Month Year History Annualized FOOL -4.71% 6.66% 22.78% 312.06% 41.04% S&P: -2.55% 6.41% 4.99% 122.26% 21.41% NASDAQ: -2.58% 9.81% 4.83% 128.59% 22.24% Rec'd # Security In At Now Change 8/5/94 710 AmOnline 3.64 97.56 2582.91% 9/9/97 580 Amazon.com 19.11 76.80 301.85% 5/17/95 1960 Iomega Cor 1.28 4.25 231.93% 10/1/96 84 LucentTech 23.81 72.25 203.47% 4/30/97 -1170*Trump* 8.47 3.63 57.20% 8/12/96 130 AT&T 39.58 57.31 44.81% 2/20/98 200 Exxon 64.09 68.56 6.98% 2/20/98 215 DuPont 59.83 58.38 -2.44% 2/20/98 270 Int'l Pape 47.69 43.63 -8.53% 8/13/96 250 3Com Corp. 46.86 29.56 -36.92% 7/2/98 235 Starbucks 55.91 29.19 -47.79% 8/24/95 130 KLA-Tencor 44.71 22.63 -49.40% 6/26/97 325 Innovex 27.71 10.75 -61.20% 1/8/98 425 3Dfx 25.67 9.13 -64.45% Rec'd # Security In At Value Change 8/5/94 710 AmOnline 2581.87 69269.38 $66687.51 9/9/97 580 Amazon.com 11084.24 44542.19 $33457.95 5/17/95 1960 Iomega Cor 2509.60 8330.00 $5820.40 4/30/97 -1170*Trump* -9908.50 -4241.25 $5667.25 10/1/96 84 LucentTech 1999.88 6069.00 $4069.12 8/12/96 130 AT&T 5145.11 7450.63 $2305.52 2/20/98 200 Exxon 12818.00 13712.50 $894.50 2/20/98 215 DuPont 12864.25 12550.63 -$313.63 2/20/98 270 Int'l Pape 12876.75 11778.75 -$1098.00 8/24/95 130 KLA-Tencor 5812.49 2941.25 -$2871.24 8/13/96 250 3Com Corp. 11715.99 7390.63 -$4325.37 6/26/97 325 Innovex 9005.62 3493.75 -$5511.87 7/2/98 235 Starbucks 13138.63 6859.06 -$6279.56 1/8/98 425 3Dfx 10908.63 3878.13 -$7030.50 CASH $12005.75 TOTAL $206030.38

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