Dot Com Stocks

It seems that the differentiation in stock price will be applied to the internet related stocks (dot com stocks), which are notorious for their investment pattern.

Shinyoung Stock Company announced yesterday its report on the analysis of internet related industry. The report says that ``the rally, which began in the middle of the last month, clearly demonstrates the differentiation in stock price related to the differentiation in the business result. When the value of company is evaluated, the business performance result is reflected in the evaluation.`` It also says, ``In the comparison between the stock price in March and the current stock price, the rise of the stock price rate in a company in which both development and profit have improved due to the differentiated profit model is distinctive. From now on, business result-oriented investment pattern will control the dot com stock price.``

- Money flows into the place where there is business result: Daeum, Saerom Technology, Hanguel and Computer, known as ‘dot com trinitarian’, hauled the rise of stock price, ruling over Kosdaq, until last January. However, nobody talks about ‘dot com Trinitarian any more. Although Daeum kept the position of market leader by making a profit of 600 million won in the first quarter of this year following the profit of 100 million won in the last quarter of last year, other two companies lost their power. While Daeum’s stock price increased 93.3% (on 18th) in comparison with the March stock price, both Saerom Tech and Hanguel and Computer made the increase of 33.3% and 31.3%, respectively.

- Meanwhile, NC Soft, famous for its on-line game ‘lineage’, roused as a new market leader marking the 67.4% of stock price rise rate during the same period. Lee Wang-Sang, analyst at LG Investment Stock said, ``Although NC Soft’s stock price went down to under 100000 won, it went back to 13-140000 won, after being acknowledged of its potentiality for growth with its business result. If it had only the growth potentiality, the recovery could not be possible.``

Neowiz backed up the rise of stock price with the business result by marking the 29.1% of operating profit rate in the first quarter through the increase of sales in the ‘one-click service’ and the community service ‘say-club’.

- From expectation to the business result: The reason that most internet companies have a big range of deficit, despite the high aggregate value of listed stock and the high price earning, is that they have expectation for the growth. For instance, several dot com companies’ aggregate value of listed stock exceeded that of Samsung Electronics early last year. However, this kind of ‘expectation’ is losing its efficacy even in the Kosdaq market. The differentiation in business result between the healthy companies and the companies that make no progress are more evident.

Researcher Park analyzed that ``(chart above) those companies in the second quarter need the strategy of ‘cheap purchase’ when it controls the stock price. For those companies in the fourth quarter, the long term investment is not desirable if an intensive reform does not take place.``

Sung Dong-Ki esprit@donga.com