Germany's Net Game

How do you say "wampum" in German? The American Indian word is Jack Welch's favorite expression for the high-octane stock of the Internet economy. As Welch notes, if you don't have it, you can't make the big deals. It has taken German companies a while to discover this, but now that they have, they are moving with speed to get their own high-valuation currency.

Siemens has spun off Epcos, an electronic components division, and has a chip-making unit, Infineon Technologies, ready to hit the market in the next few weeks. Mannesmann was creating its own wampum until the Vodafone AirTouch PLC tribe of London came in with even higher-powered currency and bought it out. Deutsche Telekom is using high-valuation stock to shop for a U.S. partner. Bertelsmann has also been playing the valuation game, spinning off Net units like Pixelpark, Lycos Europe, and soon a piece of AOL Europe. Now the bankers are trying to get in on the wampum act.

The goliath merger of Deutsche Bank and Dresdner Bank achieves critical mass but doesn't do much for the combined banks' stock power. The new combined bank must do some radical streamlining to gain efficiencies. But it does offer an opportunity for the huge Munich insurer, Allianz, to try Net banking by getting a share of Deutsche's successful online operation, Bank24, perhaps leading to an online business of its own.

The jury, especially in finance, is still out. Online banking has not been a big hit in America, where savers seem to still want branches as well as electronic access. But some things are sure. First, stock-driven deals will expand the equity culture in Germany and across Europe, making the cult of performance a permanent fixture of Europe's financial landscape. Second, Germany's move will drive others on the Continent to get their own wampum. Finally, the deal-driven Germans are likely to be among the most active buyers in the world this year. Watch the scorecard.

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