The Day Ahead: First half picks and pans

Every six months, this columnist looks in the mirror to see how his observations panned out. Aside from the usual hits and misses, we definitely had our favorite stocks this quarter. These stocks, either famous or infamous, are a microcosm of a volatile first half.

So here's a look at some of our favorite (we use the term lightly at times) stocks and themes in the first half: Pan: Corel: Why bother? Here's the folly of following one of the most entertaining companies in the tech sector. We point out a few Corel facts -- management has no credibility, can't hit a quarter and always has some sort of crisis. Then I get flamed. Then individual investors (institutions gave up already) continue to buy the stock and lose big because they confuse buzzwords with real businesses.

None of those facts kept us from writing about Corel. First the company, tries to buy Inprise and become a Linux powerhouse, and then tried to move on when the Linux buzz fades. Once the Inprise deal unravelled, Corel found itself short on cash and cutting employees, which are taking the fall for inept management. I'm cutting back on my Corel habit -- until management changes.

Pick: Red Hat: The euphoria over Linux has faded, but Red Hat is emerging as a real company making real progress. Red Hat's latest quarter shows the company is on the right path. Wall Street, for the most part, hasn't noticed. Funny how reality and Wall Street are often completely separated. Never thought I'd be a believer in a company that sells services around free software.

Pick: Business-to-business stocks: Want to find the best B2B stock out there? Look at Oracle. Aside from all the bravado, Oracle could be the next Microsoft of B2B. At the very least, it'll be a strong contender. B2B stocks went from buzz to bargain bin pretty quickly, but the a lot of truths were sorted out quickly. The major players -- Commerce One, Ariba, VerticalNet among others -- will do fine.

Execs from these companies are bullish and have every reason to be. Industry consortia may not be that big of a threat, businesses are scaling well and a lot of the fluff (B2bstores.com) has been exposed.

Pan: CDNow and the dot-com collapse: We got a lot of flack for comments about CDNow and other companies. Yes, there is value in eyeballs and other metrics, but how much is it worth? As of this posting, CDNow is still shopping itself. For vocal CDNow shareholders, this agony has dragged on long enough. I hope you all recoup some of your losses when CDNow gets bailed out.

At least CDNow fans aren't alone. Dot-coms were crushed in the first half, and the shakeout is moving slower than expected. Pets.com hopes its sock puppet can boost sales, Value America was bailed out by its big investors, and Buy.com became Sell.com. Not even Amazon.com could avoid the carnage.

Pan: Every day without fail, a company will try to pull a fast one on investors. We've seen a little of everything, but Computer Associates' shady midnight 4 July profit warning was an all-time low in corporate stunts. CA deserves to lose whatever credibility it has left.

In the first half, we heard about new profit paradigms and saw enough press release tricks to last a lifetime. Also beware of those glowing analyst research reports -- there may be an agenda. Do your homework, read the filings and keep your bullshit detector on at all times.

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