Outlook: Internet/Dixons

SIR STANLEY KALMS, chairman of Dixons, must find it hard to believe his luck. Everybody else in retailing is warning of a dire Christmas, and as consumer spending slows, their share prices are bombing. Not so Dixons, whose stock hit a new all-time high yesterday - up 2.4 per cent to 758p.

The reason for this is nothing to do with high street sales. Dixons may be having a better Christmas than many, but it still won't be able to call it a bountiful one. Rather it is to do with the American craze for Internet stocks, of which Dixons is now judged to be one. Goldman Sachs held a conference call with Dixons for American investors yesterday, and they apparently liked what they heard about the company's new Internet service provider, Freeserve, so much that they bought the shares.

In the US, Internet stocks have sky-rocketed, even though few of these companies make any money. Sir Stanley has always run his business on the basis that he buys to sell and in the process he makes a turn. That you can create value out of a business which was set up originally as a loss- leading promotional tool must come as something of a surprise. The bet with Internet stocks is that those who establish a powerful brand on the net will eventually reap rich rewards both from the exposure it gives and the opportunities it provides for e-commerce. Whether that bet comes home is anyone's guess but Sir Stanley is entitled to enjoy its warm glow while it lasts.