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Down 25% Past Week: ISDEX Scorecard After The Twister

Like a scene from the movie "Twister," storm chasing around through Internet stocks for the week August 25 through September 1 was akin to watching flying cows (bulls perhaps) being taken in the funnel only to be hurled into bear burgers on the other side.

ISDEX lost 25% of its value as the storm showed signs--finally--of settling Tuesday when the group of 50 industry bellwethers posted a 7% gain.

Monday, August 31, was the real suction sound causing ISDEX to fall a record 15% in one trading day. The storm clouds began gathering July 20, however, as ISDEX began to slip gradually from a July 7 spike reminiscent of the April "everybody loves Internet stocks" party when ISDEX hit its all-time high of 185.66. That means ISDEX as of September 1 is off 50% from its high.

Leading the selloff was CMG Info (NASDAQ:CMGI) down 41% since August 25 to $42 per share. Its sizable stakes in GeoCities and Lycos exposed it to the volatility in those two stocks also, as did its stable of private investments in Internet startups.

Still, we think CMGI represents one of the best ways to invest in the industry in one stock. It's like having a public venture capital fund focused on Net firms. If you want to arbitrage the value between private and public companies in this industry, CMGI provides one of the few choices.

Of the overall industry bellwether index on Wall Street, Mecklermedia's ISDEX shows only two of the 50 on the plus side for the week of August 25 to September 1: IP telephony service IDT (NASDAQ:IDTC) and VocalTec (NASDAQ:VOCLF), an IP communications software maker.

Check the damage report, which may turn into a shopping list for investors who wished they had bought in late 1997 to see the 180 to 186 ISDEX high reached in April and July (also known as a "taking profit time").

ISDEX ®   01-Sep-98 % change Point change % change
The Internet Stock Index   close from from from
www.isdex.com     25-Aug-98 25-Aug-98 31-Dec-97
          or from IPO*
ISDEX Geometric Average   93.20 -24.9% -30.84 -6.7%
ISDEX Price Wtd. Composite   1,213.08 -27.5% -461.27 33.4%
NASDAQ   1,575.14 -12.4% -223.03 0.3%
DJIA   7,827.43 -9.0% -775.22 -1.0%
           
IDT Corp IDTC $16.00 4% $0.63 -21%
VocalTec VOCLF $8.25 3% $0.25 -60%
Broadvision BVSN $21.25 -2% -$0.38 227%
Verisign VRSN $30.00 -2% -$0.75 114%
Yahoo! YHOO $72.25 -3% -$2.00 109%
Security First Net Bank SFNB $12.88 -5% -$0.63 78%
CNET CNWK $43.13 -8% -$3.88 185%
CyberCash CYCH $8.38 -9% -$0.81 -34%
Broadcom* BRCM $59.81 -10% -$6.94 149%
Open Market OMKT $9.91 -10% -$1.16 3%
Mecklermedia MECK $22.50 -13% -$3.38 -10%
Verio* VRIO $21.38 -15% -$3.75 -7%
Spyglass SPYG $12.38 -16% -$2.31 151%
Axent AXNT $15.88 -18% -$3.44 -8%
CKS Group CKSG $14.13 -19% -$3.38 0%
CheckPoint Software CHKPF $19.25 -20% -$4.81 -53%
Security Dynamics SDTI $10.09 -20% -$2.53 -72%
Sportsline USA SPLN $20.06 -22% -$5.56 87%
@Home Network ATHM $33.50 -22% -$9.47 33%
America Online AOL $86.25 -22% -$24.50 91%
USWeb USWB $14.44 -22% -$4.19 54%
Network Solutions NSOL $27.75 -23% -$8.13 111%
Open Text OTEXF $11.13 -23% -$3.38 -17%
Network Associates NETA $32.06 -24% -$9.94 -39%
Netscape NSCP $21.13 -24% -$6.69 -13%
Onsale ONSL $18.00 -24% -$5.75 0%
Egghead.com EGGS $7.19 -24% -$2.31 11%
Cylink CYLK $7.94 -24% -$2.56 -19%
Secure Computing SCUR $7.25 -25% -$2.38 -39%
PSINet PSIX $12.50 -25% -$4.25 144%
Mindspring MSPG $30.25 -26% -$10.38 170%
N2K NTKI $8.13 -27% -$3.06 -44%
ISS Group* ISSX $27.25 -27% -$10.31 24%
24/7 Media* TFSM $9.13 -28% -$3.50 -35%
CDnow CDNW $9.00 -28% -$3.50 -44%
Lycos LCOS $26.75 -28% -$10.41 29%
E*TRADE EGRP $17.88 -29% -$7.44 -22%
Exodus* EXDS $26.75 -31% -$11.75 78%
Inktomi* INKT $51.38 -32% -$24.13 185%
Concentric CNCX $15.13 -32% -$7.25 70%
Infoseek SEEK $17.94 -33% -$8.94 67%
WavePhore* WAVO $5.31 -34% -$2.69 -43%
Doubleclick DCLK $24.75 -35% -$13.06 46%
Broadcast.com* BCST $35.25 -35% -$19.00 96%
GeoCities* GCTY $21.38 -35% -$11.56 26%
Earthlink Network ELNK $26.75 -39% -$16.75 108%
RealNetworks RNWK $17.50 -39% -$11.00 26%
Amazon.Com AMZN $79.95 -39% -$51.67 165%
Excite XCIT $24.00 -41% -$16.38 60%
CMG Info CMGI $42.00 -41% -$29.13 178%
* change from IPO 1998          
TOTAL   1,171.08 -24% -371.11 33%
SIMPLE AVERAGE   23.90 -24% -7.57 33%

On the plus side, the newbie Internet IPOs, shown in Internet.com's IPO Index below, are up 43% as a group despite the mix of gainers and decliners divided. Of all Internet IPOs, those that solved bandwidth bottlenecks fared best.

>From its IPO pricing June 10 of this year to September 1 close, Inktomi (NASDAQ:INKT) leads all comers at 185% run from its $18 per share.

INKT's strength has been a two-fold product approach, search wholesaling and network caching.

Broadcom (NASDAQ:BRCM) attacks the broadband chip arena with a market leadership position selling its silicon to the cable and telco firms for fatter access. Similarly, Exodus (NASDAQ:EXDS) solves some bandwidth issues as a mirror site for major Web services and sites.

Internet.com's Ticker Share price % change % change
IPO Index symbol 9/1/98 8/25-9/1 from IPO
Inktomi INKT $51.38 -32% 185%
Broadcom BRCM $59.81 -10% 149%
Broadcast.com BCST $35.25 -35% 96%
Exodus EXDS $26.75 -31% 78%
GeoCities GCTY $21.38 -35% 26%
ISS Group ISSX $27.25 -27% 24%
NetGravity NETG $9.44 -26% 5%
Digital River DRIV $6.25 -26% -26%
24/7 Media TFSM $9.13 -28% -35%
WavePhore WAVO $5.31 -34% -43%
CDnow CDNW $9.00 -28% -44%
Cyberian Outpost COOL $9.38 -35% -48%
         
TOTAL   270.31    
AVERAGE   22.53 -28% 43%

GeoCities (NASDAQ:GCTY) holds potential as a consumer of that bandwidth, with the millions of people using its service to publish their own Web pages for free. The market for do-it-yourselfers is new but we think its pioneering role could lead to earnings within two years.

Users count, they are one way of discounting ad and marketing revenue for the future. Also, we think the community/Websteader space may be a closer parallel to real-world interaction than using just guides or search.

On the list of decliners, a handful of e-tailers bit the dust from IPO price. E-tail margins are thin to nil and we suspect Amazon (NASDAQ:AMZN) valuation could continue to fall as that becomes more apparent.

Stormwatching fans are encouraged to check the weather on Internet stocks as the storm came and went via these links:

 


Special ISDEX market moves coverage recap:

ISDEX all-time high and low | ISDEX weakens Aug 27 | last Thursday initial plunge; market close tally |

Monday massacre morning; & then afternoon| Top 10 decliners Aug 31



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