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Dog Days in May: ISDEX Drops On Market Meanderings

Eight weeks ago we told the Wall Street Journal reporter who asked us which way Internet stocks were headed that the high-flyers making headlines could give up 15% to 20% of their runs, and that the others that hadn't run may find some legs. Well, here it is.

Since May 19, ISDEX, The Internet Stock Index, lost 9% bringing the year to date to a respectable (and we think appropriate) 38% gain, far from the near 80% gain it peaked at April 21. Is the party over? The invitations RSVPed to the bubble that burst? We doubt it and expect that by year-end 1998 we could find reasons to justify a year-to-date gain of 70%-80% for the entire year.

The two elements that could ignite: commerce and retail, two sides of the commercial coin that we expect may fuel Internet stocks in October or November as the holiday hoopla brings out the true magnitude of Web-based commerce in the work place and home.

In the meantime, investors are forced to really do their homework here and look for firms with more than a "future" story, ones with balance sheets and businesses generating earnings today or ones ignored by the market madness that swept through the sector in April. Our latest tally:

ISDEX May 19-26

 

Mecklermedia's

26-May-98

% change

point change

ISDEX .

close

from

from

The Internet Stock Index

19-May-98

19-May-98

ISDEX Geometric Avg.

138.05

-7.9%

-11.88

ISDEX Price Wtd.

1,411.27

-8.9%

-138.42

NASDAQ

1,778.09

-3.7%

-67.78

DJIA

8,963.73

-1.0%

-90.92

Open Text

OTEXF

$17.63

7%

$1.13

Versant Object Technologies

VSNT

$6.00

7%

$0.38

Broadvision

BVSN

$16.56

5%

$0.72

Mecklermedia

MECK

$21.31

2%

$0.44

Intuit

INTU

$50.00

1%

$0.63

Concentric

CNCX

$22.75

1%

$0.25

Cylink

CYLK

$11.13

1%

$0.06

PSINet

PSIX

$11.06

-1%

-$0.13

Axent

AXNT

$25.44

-2%

-$0.41

CKS Group

CKSG

$18.88

-3%

-$0.63

CyberCash

CYCH

$17.00

-3%

-$0.59

Secure Computing

SCUR

$10.63

-3%

-$0.38

Security First Net Bank

SFNB

$10.00

-4%

-$0.38

Metricom

MCOM

$9.88

-4%

-$0.38

Verisign

VRSN

$34.50

-4%

-$1.38

CheckFree

CKFR

$21.75

-4%

-$0.88

Spyglass

SPYG

$10.38

-4%

-$0.44

America Online

AOL

$82.75

-6%

-$4.94

WavePhore

WAVO

$12.94

-6%

-$0.81

Earthlink Network

ELNK

$50.00

-6%

-$3.25

Egghead.com

EGGS

$8.63

-6%

-$0.56

E*TRADE

EGRP

$21.50

-7%

-$1.50

RealNetworks

RNWK

$23.63

-7%

-$1.81

Open Market

OMKT

$14.13

-7%

-$1.09

VocalTec

VOCLF

$16.13

-7%

-$1.25

N2K

NTKI

$17.00

-8%

-$1.44

Doubleclick

DCLK

$33.63

-8%

-$2.88

CNET

CNWK

$36.50

-8%

-$3.19

Yahoo!

YHOO

$108.25

-8%

-$9.91

Amazon.Com

AMZN

$81.88

-9%

-$8.50

Network Solutions

NSOL

$37.50

-10%

-$3.97

PairGain

PAIR

$15.63

-10%

-$1.69

CDnow

CDNW

$19.38

-10%

-$2.09

Network Associates

NETA

$60.06

-10%

-$6.56

IDT Corp

IDTC

$29.00

-11%

-$3.75

Sportsline USA

SPLN

$27.13

-12%

-$3.63

Security Dynamics

SDTI

$21.94

-12%

-$3.06

CheckPoint Software

CHKPF

$26.75

-12%

-$3.75

Onsale

ONSL

$26.25

-13%

-$3.88

Mindspring

MSPG

$53.75

-13%

-$8.06

Excite

XCIT

$52.88

-13%

-$8.13

@Home Network

ATHM

$33.63

-14%

-$5.44

Netscape

NSCP

$23.88

-14%

-$4.00

Cyberguard

CYBG

$11.75

-15%

-$2.00

CMG Info

CMGI

$43.25

-15%

-$7.75

USWeb

USWB

$17.19

-18%

-$3.75

NewsEdge

NEWZ

$10.75

-20%

-$2.63

Broadband Technologies

BBTK

$6.02

-20%

-$1.48

Lycos

LCOS

$50.38

-20%

-$12.84

Infoseek

SEEK

$22.38

-26%

-$7.75

TOTAL

1,411.27

-9%

-139.30

SIMPLE AVERAGE

28.23

-9%

-2.79

What happened? The search and navigation arena got ahead of itself in the eyes of investors. Too much "Christmas to come" was discounted into today's news and "what ifs." That's why Lycos (NASDAQ:LCOS), Infoseek (NASDAQ:SEEK), Excite (NASDAQ:XCIT) and Yahoo! (NASDAQ:YHOO) ended up the week headed south.

For now we caution on betting on brand appeal. Don't expect Christmas in May--it's almost summer, usually a slow time for technology stocks anyway. Toss in Microsoft's woes (which really may favor Internet stocks depending on how intense the trial of the century gets), and a weak broad market and the drop has some dirge to dance to.

In five months that song may sound different with all of the virtual "Santas" and the hundreds of millions of dollars we think could flow through the Web.