Press Release: November 11, 1999

WR Hambrecht + Co Issues Internet Services Industry Report

Internet Services companies should enjoy strong results and buoyant stock prices for several quarters; shakeout expected by next summer

San Francisco, CA, November 11, 1999—WR Hambrecht + Co, the online investment bank, today announced the release of a comprehensive research report on the Internet Services industry. The complete report can be accessed at www.wrhambrecht.com.

According to the report, Internet Services companies, which exist because most corporations do not have the resources in-house to "extend the enterprise" to the Internet, should post strong results and buoyant stock prices for the next couple of quarters as Corporate America continues its move onto the Internet. However, questions about slowing growth and the quality of operations at select companies are expected to emerge by next summer, leading to contracting valuations and increased valuation divergences. The report concludes that investors should focus on companies creating the building blocks for scaleable growth. In particular, investors should target companies investing in infrastructure, creating strong culture, focusing on quality client relationships, and developing a deep understanding of the enterprise value chain.

"The aggregate "Pure Play" market capitalization should exceed $50 billion in five years while the largest market cap among the public companies in this group approaches just $4 billion today," said WR Hambrecht + Co analyst Greg Gore. "This suggests that there is ample upside opportunity for investors who choose the winners. While current valuations are aggressive and we expect a shakeout by next summer, investors should be handsomely rewarded over the next several years by targeting the best quality companies."

The WRH+Co research report provides a framework for both investors and Internet Services companies. For investors, the report:

• shows that Internet Services is a large and growing market;
• demonstrates that valuations are not unreasonable but that the market is too focused on short-term growth; and
• provides a framework for selecting investments based on reliable, publicly available information.

For Internet Services companies, the report gives a sense of what the market cares about now and will care about in the future. While the report’s conclusions should not dictate strategic operating choices, they may provide a framework for building a business that will be valued over time.