Net Stocks Take Dive
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Internet stocks extended a plunge that began early in Monday's session following a pessimistic cover story in this week's Barron's.
internet.com's Internet Stock Index fell 56.02, or 5.41 percent, to 979.19, the Nasdaq Composite dropped 188.13 to 4610.00 and the Dow Jones industrial average finished up 85.01 to 10680.24.
Merrill Lynch Senior Internet Analyst, Henry Blodget agreed with the article's notion that the majority of today's Internet companies will either fail or consolidate. However, Blodget questioned the methodology applied to the Barron's study.
"While we agree with Barron's overall conclusions, we would caution against wholesale application of the methodology used in the study, which calculates "months till [cash] burnout" for 207 companies by extrapolating Q4 1999 operating losses against the companies' Q4 1999 cash position.
CDNow (CDNW) lost 1-1/8 to 5-5/8. Barron's put the company on its list of Internet firms likely to run out of cash before year's end. Barron's reported the company has less than one month's cash remaining. However, the company issued a statement disputing the report, saying it has enough cash to last at least six months.
Also lower was Priceline.com Inc. (PCLN) , down 12-5/16 to 77-11/16. Barron's reported the company may face a new roster of competitors, including the Hilton and Hyatt hotel chains which are reportedly considering launching a new booking site.
Yahoo! Inc. (YHOO) added 57/64 to 172-1/64. The company has filed with the Securities and Exchange Commission to raise its minimum number of outstanding shares to 900 million and as high as 5 billion.