ISDEX Bolts Out Of 2001 Gate

The strong rally that began early Wednesday may have lost its steam by the time the market closed, but it still left Internet stocks considerably higher by the end of the day.

Indeed, in this year’s opening weeks, ‘Net tickers clearly are outperforming the Nasdaq, as measured by internet.com’s Internet Stock Index, or ISDEX.

Through Wednesday’s trading, the 50-member ISDEX is up 12.8% in the nascent days of 2001, while the Nasdaq has gained 8.6%.

Obviously, this could change in a day, but after nine months of watching ‘Net stocks lag behind other issues, Internet investors may have reason to feel optimistic that the worst is behind them. If not, then they should at least enjoy the moment.

All told, 33 of the 50 ISDEX stocks are up in 2001, with seven having gained more than 50% and another 12 rising more than 30%.

Here’s a list of the top ISDEX gainers in the year to date:

TICKER          Company             %Gain     Sector

   Earthlink           80.1      ISPs/Access Providers
   E*Trade Group       70.3      Financial Services
   GoTo                62.4      Search/Portals
   At Home             54.8      ISPs/Access Providers
   Sapient             53.9      Consultants/Designers
   Broadcom            53.2      Speed/Bandwidth
   Razorfish           51.2      Consultants/Designers
   S1 Corp.            47.6      Security
   BroadVision         46.0      E-commerce Enablers
   Net2Phone           43.2      Performance Software
   Ameritrade          41.1      Financial Services
   Homestore.com       40.4      Content/Communities
      AOL-Time Warner     40.2      Search/Portals  
   Terra Networks      35.2      ISPs/Access Providers
   DoubleClick         33.5      Advertising/Marketing
   TicketMaster        32.9      E-tailers
   Sycamore Networks   32.7      Speed/Bandwidth
   eBay                31.1      E-tailers
   Red Hat             30.1      Performance Software

One thing that jumps out at me is 12 of the 13 Internet sectors are represented. Only Wireless is missing; ironic given the continued buzz around that sector.

So It’s Come To This

So bad is the cash burn problem facing hundreds of Internet companies, that a “national consulting company” has taken to indiscriminately spamming e-mail boxes and Web message boards, offering their services in “reducing problem debts.”

The company, which will remain anonymous, assures potential customers that it “typically reduces our client’s accounts payable and other debts to less than 20 cents on the dollar.” It even includes a handy form you can print out and fax back. (Which, if I recall correctly, was the standard procedure a couple of years ago for receiving venture capital.)

Tip for the “national consulting company”: The readers at gameprogrammers.com and the Proto Typing Information and Technical Forum probably aren’t your ideal target audience.

Tip for everyone else: If these guys also offer to underwrite your IPO, run the other way. In fact, run the other way anyway.