ISDEX Awaits Turnaround

After a dizzying 12.6% plunge last week,’s Internet Stock Index put on the brakes this week, thanks primarily to Friday’s phenomenal market bounce-back.

But it was still another down week for the ISDEX, which fell 3.7% to 607 on Wednesday and is one bad trading session from establishing a new closing low for the year. That mark was set May 26, when the ISDEX closed at 592.61, and the index actually dipped below that level, to 588, earlier Wednesday before rallying.

Several strong earnings reports from Internet heavyweights in recent days – America Online , Check Point Software Technologies (see Wednesday’s StockTracker) and Yahoo! all had impressive quarters – could help the market find a bottom, though any upward momentum might quickly dissipate if more bad quarterlies emerge in coming days.

Sixteen of 50 ISDEX stocks gained ground this week. And while that list is topped by e-commerce consultant Scient, which soared 32.3%, it is dominated by security vendors. Internet Security Systems , Check Point and RSA Security are among only seven ISDEX members to notch double-digit advances this week.

Two ISDEX companies plummeted more than 40% this week in the wake of earnings reports that fueled investor fears that online advertising spending. One, DoubleClick (down 43.4%), is understandable. The ad services market leader showed widening losses for Q3 and warned of a slowdown in sales over the next two quarters.

The other big loser this week, streaming multimedia software vendor RealNetworks (-40.5%), was a victim of market overreaction. While RNWK’s earnings met most expectations, shares were slammed after company executives also said online ad revenue could be soft in the near future. However, RealNetworks only gets about 20% of its revenue from ads running on their streaming multimedia servers: A healthy chunk, but unlike DoubleClick, not the core of its business.

Scient’s gain of nearly one-third this week owes more to shares bouncing off a new low price of $11.63 on Oct. 11 than any catalyst inspiring confidence in investors. Even at Wednesday’s closing price of $15.38, SCNT is down 79.9% this year.

Internet Security Systems’ 20.1% climb this week came in anticipation of Q3 earnings, which were released Tuesday and showed $51.8 million in revenues (up 73% from the year-ago quarter) and a net profit of $4.9 million, or 11 cents per share.

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