Internet Issues Plunge As Investors Flee to Blue Chips
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Investors sent Internet stocks reeling Monday, leaving behind a sea of red ink as the number of losers far outpaced the few gainers. Analysts attributed the move to the fact that many investors are waiting for the Consumer Price Index report due out later this week, although some also said the selling in the sector appeared overdone.
internet.com's Internet Stock Index plunged 53.34, or 11.3 percent, to 418.73 and the Nasdaq Composite tumbled 49.59 to 2,398.28. The Dow Jones industrial average gained 72.82 to 10,563.33 as blue chips were benefitting from the technology decline.
Appearing Monday on CNBC, Alan Braverman, Internet analyst for Bank of America attributed to the decline to the disparity between the sector's fundamentals and the psychology of Internet investors.
Braverman is predicting the strong sell-offs of late will lead to a strong second half for Internet stocks.
However, Lise Buyer, Internet analyst at CS First Boston, took a different tone. Buyer cautioned that firm's clients not to put money back into the sector until prices had reached more reasonable levels.
eBay Inc. (EBAY) grabbed most of the attention in the early going as shares took a drive from the opening bell. eBay plunged 29-7/8 to 136 after saying a 21-hour outage over the weekend will cut second-quarter revenues by $3 million to $5 million.
Charles Schwab Corp. (SCH) dropped 10-5/16 to 83-15/16 after reporting commission trades fell 28 percent in May. That news caused others in the sector to fall. Ameritrade (AMTD) lost 12-11/16 to 66-1/16, DLJdirect (DIR) lost 3-1/16 to 24-7/16, E*Trade Group Inc. (EGRP) dropped 5-3/4 to 32 and National Discount Broker Group Inc. (NDB) lost 5-9/16 to 34-1/4.
Other familiar names that took a fall included America Online Inc. (AOL), down 9-3/8 to 90-1/8 despite James Preissler, Internet analyst at PaineWebber, reiterating his "buy" on the stock. He said subscriber growth should increase 41 percent this year.
One of the day's few winners was Speedus.com Inc. (SPDE), up 7/8 to 6-3/16. The provider of high-speed wireless Internet service Monday snagged a $20 million investment from Nextlink Communications Inc. The company also agreed to pay another $20 million to use Speedus's wireless spectrum in the New York area.
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