RealTime IT News

Red Tide Sinks All 'Net Sectors In Bloody Q3

For a handful of Internet companies, the third quarter was like a trip to that magical land of yesteryear, when weekly double-digit advances in share price came as easily as "strong buy" ratings from cheerleading analysts.

But for 80% of 'Net tickers, Q3 was another reminder that the Internet market is back in Kansas, where, an occasional twister aside, the laws of gravity - and profitability - remain firmly in place.

Of the 380 Internet stocks trading since June 30 and followed by internet.com's Internet StockTracker newsletter, 76 posted gains in the third quarter, while 304 lost ground. (The top and bottom 10 individual stocks are listed at the end of the column.)

Much of the damage was done in September, with the Nasdaq falling 12.7% and internet.com's Internet Stock Index, or ISDEX dropping 10.1% in reaction to a string of earnings warnings. Last month was particularly disappointing to 'Net investors, who had hoped the market finally had found its legs in the wake of ticker meltdowns in March and April.

Here's a big-picture breakdown of 'Net stock performance in Q3:

                    # Stocks     % of Total

Gain of 100%+            4           1.1%
Gain of 50%-100%        14           3.7%             
Gain up to 50%          58          15.3%
Loss up to 20%          62          16.3%
Loss of 20-50%         133          35.0%
Loss of 50%+           109          28.7%

As you can see, there were more huge losers in Q3 - stocks that lost at least half their value - than there were gainers of any kind. Pretty wobbly legs.

None of the 13 Internet sectors defined by Internet StockTracker had a positive quarter, though the Wireless and Speed/Bandwidth groups kept losses to a reasonable level. Here are the sector results for Q3:

Sector                 # Stocks    % Change

Wireless                   15         -5.7%
Speed/Bandwidth            22        -12.1%
Financial Services         14        -19.7%
Security                   13        -20.9%
Content/Communities        44        -22.1%
Performance Software       49        -22.3%
Search/Portals             11        -23.0%
E-commerce Enablers        55        -23.1%
Internet Services          46        -24.9%
E-tailers                  43        -30.1%
Advertising/Marketing      19        -41.1%
Consultants/Designers      19        -43.9%
ISPs/Access Providers      30        -46.9%

That the E-tailer, Advertising/Marketing and Consultants/Designers sectors were hard-hit is no surprise. Stocks in these groups consistently have been among the biggest losers this year. ISPs/Access Providers, though, were unexpectedly ravaged, with 13 of 30 stocks falling at least 50% in Q3, and only one - IDT Corp. - showing a gain (and a paltry 10% one at that).

Now let's look at the top and bottom 20 individual Internet stocks for Q3:

LEADING THIRD-QUARTER PERFORMERS
 
    Ticker   Company           Sector                 % Gain

 1. HAND     Handspring        Wireless                155.8
 2. CFLO     CacheFlow         Speed/Bandwidth         132.3
 3. PPRO     PurchasePro.com   E-commerce Enablers     114.3
 4. IWOV     Interwoven        Performance Software    105.6
 5. CKCM     Click Commerce    E-commerce Enablers      89.0
 6. ITWO     i2 Technologies   E-commerce Enablers      79.4
 7. EMBT     Embarcadero       Performance Software     74.9
 8. PHCM     Phone.com         Wireless                 74.5
 9. CMRC     Commerce One      E-commerce Enablers      73.0
10. GTHR     GetThere          Performance Software     67.5

THIRD QUARTER BOTTOM-DWELLERS

    Ticker   Company           Sector                  % Loss

 1. EDG      EpicEdge          Consultants/Designers   -88.0
 2. NPLI     Netpliance        ISPs/Access P