INTERNET INDUSTRY

Presented By:

Melinda Ratzlaff Scott RunyanMaggie Norman

Aimee Halbach Winter Thielen

Christine Hiller

T-Bill Rate1.735%

The internet is cyclical. Largest

boom was in 1990, but the bubble has burst since then.

BUSINESS

CYCLE

GDP $11,735 Billion

George W.

Bush

Republican Whitehouse

UNEMPLOYMENT

5.2%Consumer SentimentIndividual Consumers Have

Become Key Customers For The PC Industry.

There Is Recent Talk About Implementing A

Consumption Tax.

T

A

X

E

S

United States Deficit$445,000,000,000

THE CYCLICAL THE CYCLICAL INTERNETINTERNET

THE CYCLICAL THE CYCLICAL INTERNETINTERNET

““An Industry Which Is Sensitive An Industry Which Is Sensitive To Business Cycles And Whose To Business Cycles And Whose

Performance Is Tied To The Performance Is Tied To The Overall Economy”Overall Economy”

THE TECHNOLOGY AGETHE TECHNOLOGY AGE

TREND TREND2000-2002

36% IN 2004

Two Primary Factors:Two Primary Factors:

• Improving Company FundamentalsImproving Company Fundamentals

• More Favorable Macroeconomic More Favorable Macroeconomic ConditionsConditions

IT’S AN INTERNATIONAL IT’S AN INTERNATIONAL THINGTHING

United United KingdomKingdom

16,948,986 16,948,986 UsersUsers

Germany Germany 20,930,295 20,930,295

UsersUsersU.S.U.S.

119,260,663 119,260,663 UsersUsers

JapanJapan 25,091,707 25,091,707

UsersUsers

ItalyItaly 16,948,628 16,948,628

UsersUsers

HOW’S BUSINESS?HOW’S BUSINESS?

VALUE LINE RANKINGVALUE LINE RANKING

11/9811/98

NEW KIDS IN TOWNNEW KIDS IN TOWN

World Wide World Wide Search Search EnginesEngines

Yahoo’s YisouYahoo’s Yisou

Google’s BaiduGoogle’s Baidu

6 RULES OF CYBER-SPACE6 RULES OF CYBER-SPACE1. Internet Tax Non-Discrimination Act1. Internet Tax Non-Discrimination Act2. Identity Theft Penalty Enhancement 2. Identity Theft Penalty Enhancement

ActAct3. Cyber-Security Research And 3. Cyber-Security Research And

Development ActDevelopment Act

4. Can-Spam Act of 20034. Can-Spam Act of 2003

5. Electronic Signatures in Global And 5. Electronic Signatures in Global And National Commerce ActNational Commerce Act

6. Internet Tax Freedom Act Of 19986. Internet Tax Freedom Act Of 1998

1-800-1-800-FLOWERSFLOWERS.com.com

1-800-1-800-FLOWERSFLOWERS.com.com1-800-FLOWERS.com Does

More Than Just Peddle Petunias Online

1600 Stewart Avenue

Westburry, NJ. 11590

516-237-6000

www.1800flowers.com

20-CENTURY FLOWER SHOP20-CENTURY FLOWER SHOP

We Sell We Sell Flowers Flowers

And And Specialty Specialty

GiftsGifts

In Stores, In Stores, Telephone, Or Telephone, Or

Via The Via The InternetInternet

Ticker: Ticker: FLWSFLWS

Exchange: Exchange: NASDAQNASDAQ

THE HEAD FLORISTTHE HEAD FLORIST

Jim McCannJim McCann

Chief Executive Chief Executive OfficerOfficer

Been Arranging Been Arranging Flowers Since 1986Flowers Since 1986

To Build A Reliable Brand Name That People Would Learn To Love

MONEY MONEY MONEYMONEY MONEY MONEY

McCannMcCann SoenenSoenenCEO Of FTDCEO Of FTD

$975,000

$256,731

FLOWER DISTRICTFLOWER DISTRICT

FTDFTD

Roll Roll InternationaInternationa

ll

Bear Creek Bear Creek CorporationCorporation

FROM THE EXPERTFROM THE EXPERT

Price Projection High $14.00Price Projection High $14.00

Price Projection Low $9.00Price Projection Low $9.00

Financial Strength BFinancial Strength B

RELATIONSHIPSRELATIONSHIPS

THIS IS A SEASONAL THIS IS A SEASONAL BUSINESS TO BE INBUSINESS TO BE IN

Profits Are Profits Are Higher In Higher In The 2/4 The 2/4

Quarters Quarters And Tend And Tend To Drop In To Drop In

The 1/3 The 1/3 QuartersQuarters

REUTERSREUTERS

Analysts Recommend The Stock Will Analysts Recommend The Stock Will Outperform, But There Are Still A Number Of Outperform, But There Are Still A Number Of

Them That Also Recommend To HoldThem That Also Recommend To Hold

MSN MONEYMSN MONEY

Analysts Recommend 1-800-Analysts Recommend 1-800-FLOWERS.com As A Moderate FLOWERS.com As A Moderate Buy. They Also Have Quite A Buy. They Also Have Quite A

Few Analysts Who Recommend Few Analysts Who Recommend Hold.Hold.

TO BUY OR TO SELLTO BUY OR TO SELL

Buy $7.00 - $7.30Buy $7.00 - $7.30

Sell $8.00 - $8.50Sell $8.00 - $8.50

Current Current Price $7.03Price $7.03

High Intrinsic High Intrinsic Value $12.50Value $12.50

Low Intrinsic Low Intrinsic Value $8.04Value $8.04

BUYBUY

For The Low Risk InvestorFor The Low Risk Investor

INT

RIN

SIC

VA

LU

EIN

TR

INS

IC V

AL

UEBUYBUY BUYBUY

AMAZONAMAZON

1200 12th Avenue1200 12th Avenue

“Earth’s Most Customer Centric

Seattle, WA 98144Seattle, WA 98144

1-206-266-10001-206-266-1000

www.amazon.comwww.amazon.com

Company”

AMAZON, AS IN JUNGLE?AMAZON, AS IN JUNGLE?

• Offers New, Used, Refurbished And Collectable Items

• Syndicated Stores Program

• Amazon Marketplace And Merchants Program

Ticker: AMZNTicker: AMZN Exchange: NASDAQExchange: NASDAQ

GUESS WHOGUESS WHO

Person Of The Year, Time Magazine, 1999

#3 On Fortune Magazine’s “40 Under

40” Richest People 2003

Graduated Summa Cum Laude From Princeton

University

Name: Jeffrey P. Bezos

Position: CEO

Appointed: 1994

“….to build a place where people can come to find and discover

anything they might want to buy online.”

GUESS WHOGUESS WHO

THE COMPENSATION WINNER IS…THE COMPENSATION WINNER IS…

eBayMargaret Whitman

$2,908,231

AOLRichard Parson

$13,245,165YahooTerry Semel

$601,980

Runner Up!

Mr. Bezos with Mr. Bezos with $81,840$81,840

IT’S A JUNGLE OUT THERE!IT’S A JUNGLE OUT THERE!

THE MACDTHE MACD

Possible Return: 51%-53%

GIVE ME A “V”GIVE ME A “V”

Financial Strength: B

Timeliness: 2

Technical: 5

Safety: 4

Beta: 2.49

NO BOUNDARIESNO BOUNDARIES

FranceGermanyJapanCanadaGreat Britain

WA

CA

NV

KS

ND

TN

VA

KY

PA

DE

RETURNING THE FAVORRETURNING THE FAVOR

Outperformed the S&P 500 Technology Index Outperformed the S&P 500 Technology Index since August of 2002since August of 2002

ALL ABOUT THE PROFITSALL ABOUT THE PROFITS

A Dollar A Dollar Made Is A Made Is A

Dollar Dollar EarnedEarned

REUTERSREUTERS

Strong Signal To SellStrong Signal To Sell High Mean RatingHigh Mean Rating

BLOOMBERGBLOOMBERG

Strong Signal To Sell!Strong Signal To Sell!

MAGGIE’S RECOMMENDATIONMAGGIE’S RECOMMENDATION

BUY: $35-$36 SELL: $53-$55BUY: $35-$36 SELL: $53-$55

Current PriceCurrent Price$33.29$33.29

High Intrinsic ValueHigh Intrinsic Value$63.06$63.06

Low Intrinsic ValueLow Intrinsic Value$40.54$40.54

UNDERVALUEDUNDERVALUEDBUY BUY For Long-TermFor Long-Term

VerisignVerisignIntelligent Infrastructure ServicesIntelligent Infrastructure Services

487 East Middle Road

Mountain View, CA. 94043

650-961-7500

www.Verisign.com

COME AGAIN?COME AGAIN?

Ticker: Ticker: VRSNVRSN

Exchange: Exchange: NASDAQNASDAQ

Internet Services Group

Provider Of Critical

Infrastructure Services

Communications Service Group

THE MAN BEHIND THE THE MAN BEHIND THE BUSINESSBUSINESS

Stratton Stratton SclavosSclavos

CEO & DirectorCEO & Director

July July 19951995

Honored For Leadership Success By…Forbes Forbes MagazineMagazine

Morgan Morgan StanleyStanley

Computer WorldComputer World

““We want everyone to We want everyone to reap the benefits of reap the benefits of

the ongoing the ongoing revolution in digital revolution in digital

commerce and commerce and communications.”communications.”

THE OFFICERSTHE OFFICERS

$862,058$862,058

SclavosSclavos ConnerConner

ThompsonThompson CovielloCoviello

$1,262,308$1,262,308

$2,714,447$2,714,447 $684,000$684,000

BATTLING IT OUTBATTLING IT OUT

SYMANTESYMANTECC

ENTRUSTENTRUST

RSARSA

MACDMACD

Possible Return of 17.86% -- Possible Return of 17.86% -- 46.11%46.11%

BUYBUYSELL

WHAT’S IT WORTHWHAT’S IT WORTH

TimelinesTimelinesss

2/52/5

SafetySafety

4/54/5

TechnicalTechnical

2/52/5

HOW CAN I SERVE HOW CAN I SERVE YOUYOU

•Helps With Helps With Internet Related Internet Related ProblemsProblems

•Email Security Email Security SolutionsSolutions

•Billing And Billing And Payment Payment ServicesServices

•Expansion Into Expansion Into New CountriesNew Countries

STAGE FRIGHTSTAGE FRIGHT

Has Not Outperformed The S&P Has Not Outperformed The S&P In 4 YearsIn 4 Years

A NET PROBLEMA NET PROBLEM

Verisign Verisign Needs To Needs To

Continue To Continue To Outperform Outperform the S&P In the S&P In Net Profit Net Profit Margin To Margin To Bring Up Bring Up

Their 5 Year Their 5 Year Average.Average.

REUTERSREUTERS

Hold Is Hold Is WinninWinnin

g By g By Only 4 Only 4 VotesVotes

Very Diversified In Their RecommendationsVery Diversified In Their Recommendations

BLOOMBERGBLOOMBERG

Again, Analyst’s Again, Analyst’s Recommendations Are Pretty Recommendations Are Pretty

Spread Out.Spread Out.

IN RESULT…IN RESULT…

Current Price Current Price $25.33$25.33

High Intrinsic Value High Intrinsic Value $48.57$48.57

Low Intrinsic Value Low Intrinsic Value $29.14$29.14

This Stock Is Only For Risky This Stock Is Only For Risky InvestorsInvestors

UNDERVALUEUNDERVALUEDD

SELLSELL

Buy $15-Buy $15-$17$17

Sell $32-Sell $32-$34$34

YAHOOYAHOOInternet Communication Global Internet Communication Global

LeaderLeader

701 First Avenue701 First Avenue

Sunnyvale, CA 94089Sunnyvale, CA 94089

Phone: (404) 349-3300Phone: (404) 349-3300

www.yahoo.comwww.yahoo.com

SEARCHING AN ENGINESEARCHING AN ENGINE

Ticker: YHOOTicker: YHOO Exchange: NASDAQExchange: NASDAQ

•Provides Users Provides Users With Everything With Everything From A-ZFrom A-Z

•74% Of Revenues 74% Of Revenues Comes From Online Comes From Online AdvertisingAdvertising

GLOBAL LEADERGLOBAL LEADER

Name: Terry SemelName: Terry SemelPosition: Chairman Position: Chairman

& CEO& CEOAppointed: May 2001Appointed: May 2001

The More We The More We Invest In Our Invest In Our

Users The More Users The More They Will Invest They Will Invest

In UsIn Us

Restored A Stagnating Restored A Stagnating $8.11 Stock Price to $8.11 Stock Price to

$32.00$32.00

Restored Profitability For Restored Profitability For The First Time In 7 The First Time In 7

Consecutive QuartersConsecutive Quarters

THE GOLDEN RULETHE GOLDEN RULE

AOL – Parsons $13,245,165AOL – Parsons $13,245,165

eBay – Whitman $2,908,231eBay – Whitman $2,908,231

Yahoo – Semel $601,980Yahoo – Semel $601,980

Google – Schmidt $554,450Google – Schmidt $554,450

THE BATTLE FOR MARKET THE BATTLE FOR MARKET SHARESHARE

MACDMACD

Sell at $36-$38

Buy at $30-$33

Possible Return of 15%-20%Possible Return of 15%-20%

LINE ‘EM UP!LINE ‘EM UP!

Financial Strength B+Financial Strength B+

Timeliness 1Timeliness 1

Technical 4Technical 4

Safety 3Safety 3

THE ANALYSISTHE ANALYSISS

T R

E N

G T

HS

T R

E N

G T

H

Brand Brand RecognitionRecognition

W e

a k

n e

s s

W e

a k

n e

s s vulnerabilityvulnerability

THE ANALYSISTHE ANALYSIS

Recent Recent AcquisitionsAcquisitions

T h

r e a

t sT h

r e a

t s

Increased Increased CompetitionCompetition

O p

p o

r t u n

I t yO

p p

o r t u

n I t y

How am I doing?How am I doing?

Underperformed the s&pUnderperformed the s&p

RISING UP TO THE CHALLENGERISING UP TO THE CHALLENGE

Out performing the S&P In All Out performing the S&P In All Categories!Categories!

reutersreuters

•Low Risk RatingLow Risk Rating

•Mean Rating of 2 Mean Rating of 2 on a 1-5 scaleon a 1-5 scale

bloombergbloomberg

Analysts Are Expecting a Analysts Are Expecting a Higher Q1 Earnings Growth Higher Q1 Earnings Growth ReportReport

BB

UU

yy

What to doWhat to do

Current Price $34.94Current Price $34.94High Intrinsic Value High Intrinsic Value

$31.55$31.55Low Intrinsic Value Low Intrinsic Value

$19.72$19.72OVERVALUED

Moderate to Moderate to short-term short-term

investor with investor with holding period holding period

of 1-3 yearsof 1-3 years

BUY: $28-BUY: $28-$34$34

SELL: $36-SELL: $36-$40$40

BUYBUY

Vignette Vignette CorporationCorporation

1301 SOUTH MOPAC EXPRESSWAY 

AUSTIN, TX 78746 

1-512-743-4300 

WWW.VIGNETTE.COM 

The Efficiency Experts 

Ticker: VIGN

•Founded in 1995 in Austin, TX

•Produces Content Management Software

•Went Public in 1999

Exchange: Nasdaq

W H A T I S I T T H A T Y O U D O ?

THE MAN BEHIND THE BUSINESS

•Thomas E. Hogan

•President & CEO

•Appointed in 2002

•Thomas E. Hogan

•President & CEO

•Appointed in 2002

THE MAN BEHIND THE BUSINESS

“Our goal is to build on our progress and

momentum in 2003.”

HOW DOES HOGAN ADD UP?

$10 M

$6 M

$2 M

Hog

an

(Vig

nett

e)

Tu

cci

(EM

C)

Palm

isan

o(I

BM

)

Rob

ert

s(F

ileN

et)

Total Compensation

Options

PUT ‘EM UP!

Management Software

Information Technology

Organization Software

M A C D

SELLBUY

Possible Return of

34%-41%

THE VALUE IN VIGNETTE

Financia

l Stre

ngth

B+

Earn

ings

Pre

dic

tabili

ty25

Price Growth Persistence5

Stock’s Price Stability5

G R O W I N G P A I N S

60

50

40

30

20

10

Sales vs. Qtr.

1yr. Ago

Sales vs. TTM

1yr. Ago

Sales – 5yr.

Growth

VignetteTechnologyS&P 500

COMPARING APPLES TO APPLES

Has Not Outperformed The Industry Or The S&P

500 For The Last Five Years.

IT’S ALL ABOUT THE BENJAMINS

-50 0 50 100

Gross Margin

G.M. - 5 years

Operating Margin

O.M. - 5 years

Net Profit Margin

N.P.M. - 5 years

VignetteTechnology

S&P 500

BLOOMBERG

Bloomberg Says To Hold

The 40-60% Can Change In The Near Future

REUTERS

HOLD

The high mean rating means

that the company could be in serious trouble.

Says ToHOLD

Says To

M Y R E C O M M E N D A T I O N

S

E

L

L

ValuEngine

Risk Adverse

Good Concepts

Current Price Current Price $1.29$1.29

Intrinsic: High $1.36 Low $1.15

BUY: $1.00-BUY: $1.00-$1.29$1.29

SELL: $1.52-SELL: $1.52-$1.58$1.58

eBayeBay““I Got It On eBay!”I Got It On eBay!”

eBayeBay

2145 Hamilton Avenue2145 Hamilton Avenue

San Jose, CA. 95125San Jose, CA. 95125

1-408-376-74001-408-376-7400

www.eBay.comwww.eBay.com

““I Got It On eBay!”I Got It On eBay!”

WHAT A CONCEPT!WHAT A CONCEPT!

Ticker: EBAYTicker: EBAY Exchange: NASDAQExchange: NASDAQ

* Lead Trading * Lead Trading Forum On the Forum On the

InternetInternet

* Over 27,000 * Over 27,000 Categories to Categories to Choose FromChoose From

* Uses Paypal for * Uses Paypal for Safe and Easy Safe and Easy TransactionsTransactions

The power of a womanThe power of a woman

Margaret (Meg) Whitman

President, CEO, & Director

Appointed in 1998

eBay desires to create eBay desires to create an efficient, honest an efficient, honest

market where everyone market where everyone has to play by the same has to play by the same

rulesrules

Margaret (meg) Whitman

Show me the moneyShow me the money

AOL: $13,245,165AOL: $13,245,165

Yahoo: $601,980Yahoo: $601,980

Google: $554,450Google: $554,450

eBay: $2,908,231eBay: $2,908,231

Amazon: $81,840Amazon: $81,840

Entry-Level Marketer: $30,000Entry-Level Marketer: $30,000

The head honchos!The head honchos!

eBay’s Main Competitor!eBay’s Main Competitor!

AOLAOLyahooyahoo googlegoogle

macdmacd

Possible Return: 61%-62%

What’s in a name?What’s in a name?

Financial Strength A+Timeliness 2Beta

2.06Technical 3Safety 3

Tickets to the gun showTickets to the gun show

•Brand and Market Leadership

•Double-Digit Growth

•Innovative Developments

Is that a threat?Is that a threat?

•Results of litigation proceedings

•competition

•Exchange rates

Head of the classHead of the class

Has Outperformed the S&P Since October Has Outperformed the S&P Since October 20022002

optimismoptimism

Analysts are optimistic about Analysts are optimistic about

eBay’s core businesses and eBay’s core businesses and

emerging growth vehiclesemerging growth vehicles

paypalpaypal Marketing abroadMarketing abroad

•Makes online transactions Makes online transactions easyeasy

•Customers feel confident Customers feel confident about putting their about putting their information onlineinformation online

•30% of revenues come 30% of revenues come from foreign countriesfrom foreign countries

•Major playerMajor player

•Untapped diversified Untapped diversified marketsmarkets

reutersreuters

Leaning towards a buy for ebay’s Leaning towards a buy for ebay’s stockstock

bloombergbloomberg

Buy!Buy!Buy!Buy! Buy!Buy!

What would scott do?What would scott do?

undervaluedundervalued

Current price

$31.97

High intrinsic

$76.58

Low intrinsic

$49.55

So…So…

Buy!Buy!

Buying at $31.97 +Buying at $31.97 +Selling at $60.00 =Selling at $60.00 =

gain of 87.7%gain of 87.7%

Buy: $36-$37Buy: $36-$37 Sell: $58-$60Sell: $58-$60

THANK YOU FOR YOUR TIME

The Internet Group