Internet Stocks Take Heavy Hit

Internet issues suffered on Tuesday amid profit taking and on news of an
imminent announcement from Yahoo! and K-Mart. The portal and retailer are
widely expected Wednesday to announce an agreement that will offer
users free, advertising supported, Internet access.’s Internet Stock Index plunged 40.41, or 4.78 percent, to
804.97, the Nasdaq Composite lost 86.90 to 804.97 and the Dow Jones
industrial average finished down 32.42, at 11160.17.

America Online Inc. (AOL)
dropped 6-1/16 to 87-15/16. Merrill Lynch senior analyst, Henry Blodget
cited the reported deal between Kmart Corp. (KMT) and Yahoo! (YHOO) as a potential threat to AOL’s revenue model and
market value per subscriber. The subscriber-dependent ISP generates 75
percent of its revenue from subscriber fees and might now be forced to
provide a free Internet access service to consumers.

, a provider of technology related news and content announced it has
experienced a 44 percent jump in unique visitors since launching its most
recent advertising campaign. Shares tacked on 13/16 to 65-13/16.

announced the formation of CMGI Solutions, an organic (in-house) company
dedicated to providing end-to-end e-business solutions for enterprises.
Shares were as high as 226-1/8 on the day, before falling 6-1/8 from the
opening price to 205-3/4.

Globix Corp. (GBIX)
matured 8-1/4 to 75-1/2. SoundView Tech. initiated coverage with a “strong

VeriSign (VRSN)
lost 3-7/8, closing at 115-1/2. Merrill Lynch initiated coverage of the
online security solutions company with a near-term “accumulate,” long-term
“buy” and a $140 price target.

Digital Island Inc. (ISLD)
leaped 9-7/8 to 140. Digital Island’s Sandpiper Networks unit expanded an
existing deal with AOL to use Sandpiper servers which streamline content
delivery. (MYPT)
rose 5-9/16 to 48-5/16. The Net marketing company reported Tuesday its
transaction volume was up 46 percent during the holidays compared to average
monthly numbers.

Exodus Communications Inc. (EXDS)
soared 11-5/16 higher to 179. Salomon Smith Barney raised its rating on the
Internet hosting firm to a “buy” from “outperform” and set a $215 price
target. Inc. (LTWO)
jumped 1-5/16 to 4-31/32. The company, which offers tutoring online,
announced it will add a new course on Linux.

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