Bloodbath comes to mind as the Internet and technology sectors drop today with ISDEX plunging 11% to 418.73. Let’s see how far it’s fallen. April 13 ISDEX hit its 696.76 high. So this bellwether indicates that Internet stocks are down 40% as a group from their highs in two months. I believe we could see some more weakness before any widespread buying occurs. But value in my mind starts to emerge in some of these stocks.
Right now, however, too many negative elements lining up keep pushing the sector down: 1) interest rate fears 2) soft summer (that’s traditional) and 3) more IPOs than investors know what to do with.
We’ll let summer shake the good from bad fruit and see which are standing in August/September/October. For on the other side of the equation depressed values make some of these firms more attractive as acquisition candidates. It also brings out the fact that mergers may form a stronger business and may no longer be a luxury but a necessity for long-term value creation for Internet firms trying to go after a wide consumer or corporate base. Girth matters now.
While DoubleClick has always been an ad leader to me the marketing network potential hasn’t been tapped. That potential could be with Abacus, which will be absorbed under the DoubleClick name. DCLK falls with the overall weak Internet sector 20% to $70.75 on double normal volume.
DCLK is off 60% from its highs. I like the buy and think DoubleClick could be stronger moving forward both in earnings and marketshare, not only in Internet but hybrid Web/TV/devices.