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RealTime IT News

Economic Data Takes Toll on Internet Stocks

Stocks were sent lower across the board Friday after inflation fears were ignited after the latest consumer price index data suggested higher interest rates could be on the horizon.

Internet.com's Internet Stock Index lost 14.33, or 2.44 percent, to 564.39, the Dow Jones industrial average lost 193.87 to 10,913.32 and the Nasdaq Composite lost 54.13 to close at 2,527.87.

In his weekly update on the sector, BancBoston Robertson Stephens Internet analyst Keith Benjamin said Internet stocks may fall up to 25 percent before the summer. However he said certain stocks, such as Lycos Inc. (LCOS) and Ticketmaster-Online CitySearch (TMCS), still look attractive.

Internet bellwether America Online Inc. (AOL) lost 6-5/8 to 126 in advance of next week's investor conference. Benjamin said more details on AOL's high-speed strategy could be revealed.

"We hope to hear more about DSL developments and hopefully gain some insight into timing of availability for AOL's customers. We would not be surprised to see an annoucement with a cable provider, perhaps one now feeling more threatened by AT&T. We also expect to hear about the continued strength of AOL's business across all levels, including measures of membership loyalty," Benjamin wrote.

Online broker E*Trade Group Inc. (EGRP) lost 4-7/8 to 106-13/16. Regulatory filings reveal a number of E*Trade directors have sold large chunks of shares over the past two weeks.

Not all stocks ended in the red, however. Healtheon Corp. (HLTH) soared 10 to 57. The company, founded by Netscape co-founder Jim Clarke, is reportedly near a merger with WebMD, which also provides medical information and services on the Internet.

Priceline.com Inc. (PCLN) jumped 11-5/16 to 132-13/16 after the company was reiterated a near-term "accummulate" by Merrill Lynch Internet analyst Henry Blodget.

Cable Internet provider @Home Corp. (ATHM) ended up 13/16 to 150-1/8 after being as high as 156-1/2 earlier in the session. Late Thursday, @Home and Microsoft announced they would work together to speed the deployment of cable Internet access to customers served by small and mid-size firms.


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