Live Free and Die
To survive, more Websites now have to charge for what they used to give away


June 3rd, 2002

Barron’s Online
Electronic Investor

Edited by Randall W. Forsyth

Free might be the most powerful word behind the growth of the World Wide Web. If there had been a toll booth thrown up every time you wanted to access some content or send an e-mail, the Web would be quite a different place than it is today. The same also goes if investors hadn’t thrown free money at any number of harebrained Websites.

Now Websites — that is, those that survived the dot.com bubble era — need to find new ways to pay for themselves, which means charging for services and content that had been free. Take the Financial Times (www.ft.com.) Recent changes at FT.com, which already tops our list for international market news, raise it into the elite group of Barron’s four-star sites for overall excellence, although some features now are available only to paid subscribers.

There are two subscription options. Level 1 ($95 a year) offers exclusive news and commentary, industry-specific analysis and reports, a power search tool and access to archives, previews from the print version of the FT, and personal productivity tools (calendar, file storage, etc.). Level 2 subscribers ($225 a year) also get World Company Financials (in-depth data on more than 18,000 listed companies) and the World Press Monitor (access to more than 500 international media resources).

But most of FT.com’s content remains free. The site is among the most comprehensive compendiums of news and data on world markets and business communities that you’ll find on the Web. Frequently updated news, market data, and commentary from numerous sources keep you in touch with what’s happening around the globe, no matter what time zone you’re logging in from. Tools probably are the site’s weakest point, so you might not be able to do all of your market research here. But the basics are more than covered, with comprehensive quotes, charts, a portfolio, and financials. Discussion forums are fairly active.

FT.com is one whale of a site, but the site’s designers have managed to rope all the content into a very clean, manageable interface. Anyone eyeing world markets should at least visit the free content, and serious global investors should consider popping for the paid content.

Some sites, like Microsoft MoneyCentral (now CNBC on MSN Money, moneycentral.msn.com) started out as paid sites, then went free. We recently ran across a site that spent only a scant few weeks as a paid site, and now is free. Stock Diagnostics (www.stockdiagnostics.com) will begin charging as it adds services, but for now, it’s offering, gratis, another way of looking at earnings, a topic at the top of investors’ current worry list. The site offers its alternative to earnings per share, and the developers claim it catches potential problem companies that look robust based on their reported earnings. Investors now know, of course, that reported results sometimes obfuscate more than they illuminate.

Operational cash flow per share (OPS), according to Stock Diagnostics, is the cash flow from operations derived from a company’s cash-flow statement (sources and uses), the third part of a company’s financial report. Stock Diagnostics seeks to strip away accounting distortions that go into earnings or Ebitda (earnings before interest, taxes, depreciation and amortization). It tries to diagnose companies suffering from what it calls the “EPS Syndrome,” where reported earnings hide the true financial condition. It claims its model would have signaled the meltdowns of Sunbeam and Enron. Much of the Frequently Asked Questions portion of the site focuses on how Enron reported positive earnings in the first two quarters of last year while its OPS was in the red.

This software has been six years in the making, but the site’s in its early stages. About all you can do at this stage is plug in a stock symbol or name and get back a graph showing the company’s EPS and OPS over four quarters, 20 quarters, and five years. Financial companies aren’t covered currently because the methodology doesn’t apply, Stock Diagnostics says. It’s one to keep an eye on, though, so watch its track record. Full disclosure: We learned from the site that the developers were led by former executives of Dow Jones, the publisher of Barron’s, and Telerate, Dow Jones’s former unit.

On our point system, 13-15 points get a *1/2 rating; 16-18, **; 19-21, **1/2; 22, ***; 23-24, ***1/2; and 25-30, ****.

Site Ease of Use Depth & Usefulness
of Data
Editorial Content Interactivity Timeliness Total Rating URL
FT.com 5 5 6 3 6 25 **** www.ft.com
StockDiagnostics.com 4 4 4 2 4 18 ** www.stockdiagnostics.com
EarningsWhispers.com 5 3 2 1 4 15 *1/2 www.earningswhispers.com
InvestorLinks.com 5 4 0 2 3 14 *1/2 www.investorlinks.com

Whisper numbers — unofficial, off-the-record earnings estimates “whispered” by Wall Street pros and now blasted publicly through the halls of the Internet — have proved to be effective content for more than one Website. EarningsWhispers.com got in on the game early and is still going strong. It posts daily earnings news and warnings of upcoming announcements, along with its own estimates and a regularly updated Whisper Report.

All of this has always been free. Earlier this year, though, the site added premium content that’s priced for the serious day trader. For $99.95 per month, subscribers will regularly receive lists of stocks that are expected to outperform the rest of the market over the next two-to-three days, based on different strategies. According to a company spokesperson, these include Guidance Plays (a trading strategy based on corporate earnings guidance), Whisper Plays (based on earnings whispers in relation to consensus estimates), Release Plays (based on actual released earnings compared to the whisper number and consensus estimate), and the Double Play (a play on a stock that meets both guidance and release play criteria).

Subscribers also can set up watch lists and receive e-mail alerts when a company announces earnings. EarningsWhispers.com is working on a tiered subscription plan and business services such as transcripts of conference calls, availability of historical data, and licensing of content. Some Websites started free and have remained free. Those of us who have occasional need of directories of investment-related Websites miss the late Investorama. But there are similar sites. InvestorLinks (www.investorlinks.com) is one. Like Investorama, it’s free. It doesn’t offer the educational resources that Investorama did, but its directory of financial sites is quite comprehensive. It isn’t limited just to investment issues, though the bulk of the links are to investor sites.

Sites are broken down into categories and subcategories. Under Mutual Funds, for example, subcategories include advisories, brokerages, investor and industry associations, market timing, and fund companies. Clicking on any of these produces a list with links and brief descriptions. Other major categories include brokerages, commodities and futures, financial news, global markets, options and financial software. A directory contains links to public-company sites. There’s still plenty of free investment-related Web content, maybe enough to satisfy most investors. Web developers have an uphill battle finding innovative content and services worthy of subscriber fees.


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