RealTime IT News

Earnings Fears Lead to Steep Internet Stock Tumble

Fears that earnings will miss the mark caused a broad market sell-off Tuesday which took its toll on Internet stocks.

Internet.com's Internet Stock Index slumped 29.99, or 5.57 percent, to 508.70. The broader indices also posted losses, with the Nasdaq Composite losing 73.18 to close at 2,322.76 and the Dow Jones industrial average plunging 218.68 to 9,671.83.

Among the day's losers was Yahoo! (YHOO), which fell 9-1/2 to close at 155-1/2 amid continued speculation the company may purchase Internet broadcaster Broadcast.com Broadcast.com (BCST)shed 4-1/2 to 112.

America Online Inc. (AOL)dropped 8-13/16 to 121-3/16. Several analysts voiced concern the stock, which is trading at 519 times earnings, is overvalued.

Two of last week's hot Internet IPOs went different directions. Shares of Cheap Tickets (CTIX), an online travel site, lost 3/4 to close at 25-7/8. Women's online community iVillage (IVIL) jumped 9-1/2 to 80-1/4.

Online publisher CNET Inc. (CNET) Monday gained 1-1/4 to 94-1/2 after purchasing KillerApp Corp., a comparison shopping service for computers and consumer electronics.

Software retailer Egghead.com Inc. (EGGS) rose 1-15/16 after Prudential Securities initiated coverage with a "strong buy" rating. Analyst Paul Merenbloom said he expects the stock to climb to 30 over the next year.

On the IPO front, shares of online auto retailer Autoweb.com (AWEB) skyrocketed 26 to close at 40 on the company's first full day of trading.

The company floated 5 million shares on Monday which debuted at 14. The company plans to use most of the IPO proceeds for advertising and promotions.