The debate: Don’t get me started. Suffice it to say that Houston really IS smoggy, that Bush really DOES oppose the Hate Crimes statute, and that Gore’s characterization of Bush’s tax proposal is ACCURATE, while Bush’s characterization of it is disingenuous at best. And now back to our regularly scheduled programming.

Things can change a lot in a few months.

Yahoo was down another 17 or so yesterday, to 65. Here’s what I wrote about it on January 4, under the headline, Yahoo! The stock was just touching its all-time high of $500 (which became $250 once it split).

This is really getting exciting. Yahoo was up $42 yesterday, to $475 a share – its market cap is now $125 billion. If it quadruples again this year and next, it will be the first $2 trillion company. (So far, the world’s highest market cap goes to Microsoft, at around $600 billion.) Yahoo earned a solid 25 cents a share in the most recent 12 months, so who says earnings are the kiss of death for an Internet company?

Needless to say, paying $475 for an annual earnings stream of, most recently, 25 cents, seems high. Would you give me $475 if I promised to give you 25 cents a year? Would you liquidate all your assets and give me $475,000 if I promised to give you $250 a year?

But it’s not the 25 cents that has people excited. Obviously.

First Union analyst Carolyn Luther Trabuco rates the stock a strong buy at $475 – it’s cheap here! – because, according to CBS/Marketwatch, she thinks it should hit $600 in the next 12 months. What has her excited is her expectation that revenues for this past quarter will come in at $190 million. And she has upped her earnings-per-share forecast by a full penny, to 16 cents for the quarter just ended from the 15 cents she had previously anticipated. Multiply those quarterly sales and earnings expectations by four, and you have the company now selling for 164 times annual sales and 742 times annual earnings.

But of course the point is that Yahoo sales and earnings will keep growing. Otherwise, why would you pay $475 for a claim on 16 cents in quarterly earnings? You could get $8 a quarter right now from a federally-insured bank certificate of deposit.

(For those slow at math: $8 is a larger amount of money than 16 cents.)

Right now, Yahoo is valued at significantly more than Ford and General Motors, combined. Toss in Dow Jones (which owns, among other things, the Wall Street Journal) . . . and Yahoo is still considered the greater prize. Only when you toss in the New York Times Company, too, does the market consider the two baskets – Basket A, containing Yahoo, and Basket B, containing Ford, GM, Dow Jones and the New York Times Company – about equal in value.

Carolyn Luther Trabuco thinks this is ridiculous. Within a year, she thinks, Yahoo will have added another 26% in market value, leaving Basket B in the dirt.

And the way things are going, I wouldn’t be surprised.

With a lot of us licking various wounds these days, there is at least some fun in looking back on the folly. For those of you with a taste for it, here’s what I had written a few days earlier, December 27, about Internet Capital. ICGE closed at 12 yesterday, down from a post-split high of 212. And here was the next day’s column about Priceline. PCLN is down from a high of 104 to around 5.

Nor is it only the Internet stocks. Have you ever tried my little Scale? (You can get to it by clicking SCALE in the middle of the bar above this column.) A while back, I used it to point out how Dell was being valued by Wall Street at more than Ford, General Motors and United Airlines combined. Today, Dell is still worth $60 billion — not nothing. But at $23 a share, down from $59 earlier this year, and selling at “just” 35 times its past year’s earnings, it has reentered the earth’s atmosphere.

Of course, it’s far easier being right than rich. I did make money shorting some of these stocks, but probably lost even more shorting others too early. (In theory, I could have just ridden out the storm. But you’d be surprised how one’s nerve buckles when one is losing $20,000 a day and seasoned 28-year-old analysts at venerable Wall Street investment banking houses are raising their target prices 100 points at a time.)

But never mind me — the questions on your mind (I’d wager) are:

Well, are these stocks buys now?

Mmmm . . . no. Some of them may survive and even rebound, but most of them will, at the very least, have to suffer months’ more “consolidation,” as it is known, and tax-selling pressure.

What’s wildly overpriced, ripe to be shorted, now?

My current albatross is a company called Juniper, which makes the Internet backbone that will be central to the future of civilization. At 206, it’s not quite 15% off its all-time high, up from 35 earlier in the year — a respectable gain in a difficult year — and though it has very little in the way of sales, it is currently valued at more than General Motors, Apple, Amazon and the New York Times Company, combined. A Juniper fan tells me he expects that the company will soon show the fastest ramp up from zero to $5 billion in sales in the history of the world, and I don’t doubt it. Juniper is, from what I can tell, and all kidding aside, a very fine, exciting, company. But even assuming 100% of the $5 billion is profit — with no overhead, expenses or taxes — I’m not sure the company is currently worth its $60 billion market valuation.

Because if this is such a phenomenally profitable business, won’t others try somehow to come in and compete? The barriers to entry are very high. But if little JNPR was able to enter when Cisco was the only player, might Lucent or IBM or someone be able to compete with Juniper?

The truth is, I don’t know. I can’t even get my DSL line work, let alone predict the future of the communications industry. Which is why I try to make measured bets. (And why I generally lose money shorting stocks, as you will, too, if you try this.) My world won’t end if Juniper soars still further.

The truth is, Juniper may one day be valued more highly not just than GM, Apple, Amazon, and the New York Times Company, combined, as now, but more highly than all those plus (are you ready?) Federal Express, Ford, AT&T, Kodak, Yahoo, and the entire U.S. airline industry.

Why not? Cisco already is.


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