Internet Investor

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The Independent Online
DIXONS' DECISION to float off part of its Freeserve Internet service provider appears to have opened the floodgates. Within the last week, the personal finance site MoneyExtra and the UK auction site QXL have both announced plans to come to the stock market. But what are they really worth? What would you pay for a piece of them?

The Internet analysts Fletcher Research say 66 per cent of UK Internet users now use a free service provider. Freeserve dominates, with a 31 per cent market share. However, translating that into a valuable revenue stream is problematic.

The Web-based investment club MoneyWorld is running a poll of its members on what they think Freeserve might be worth. Almost 27 per cent believe Freeserve to be worth more than pounds 1.8bn - roughly in line with Dixons' own thinking. The company is said to reckon that each user is worth up to pounds 1,500 - and no, I don't know how they work that out. Perhaps more significantly, and a definite vote for sanity in Internet valuations, 55 per cent of the votes cast suggested a value for Freeserve of pounds 600m or less. That is still serious money for a business with a revenue stream of only pounds 2m or so.

You may already have a piece of the Internet action through Framlington's NetNet fund, launched earlier this year. I recently took Framlington to task over the fact that its website had not been updated for two months. I am happy to report that it is now fully functioning. As for performance, the NetNet fund is only fractionally up on its launch, but is up almost 12 per cent on a month ago - another reminder, if you needed one, of the volatility of Internet investments.

A survey by the PC manufacturer Dell estimates some 8.2 million Internet users in the UK, almost a fifth of the adult population. Separately, Screentrade and Interactive Investor commissioned a Mori poll that suggests more than 3 million people already use the Internet for day-to-day personal finances. John Blowers, UK managing director of Interactive Investor, says: "The Internet is a convenient way of planning your finances."

Well yes -when it works, and the sites work. But feedback from readers suggests all is not well.

Some have experienced difficulties with Redmayne Bentley's new trading facility and an "unhelpful" helpline. These may just be teething problems, but I would be interested to hear from anybody who has had problems with stockbrokers over the Internet.


Robin Amlot: