Red Tide Sinks All 'Net Sectors In Bloody Q3
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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.
# 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