ISDEX Joins ‘Net Stocks Rally

Until Wednesday’s session, it was not a good week for’s
Internet Stock Index, which was down nearly 5% from July 5 through
Tuesday’s close.

But a terrific post-earnings surge by portal giant Yahoo! led Internet
stocks to a huge rally Wednesday. Yahoo itself gained 18.4%, while ‘Net
stocks as a whole climbed more than 8%.

That rally helped the ISDEX climb 57 points, to finish the week of trading
ended Wednesday with a 3% gain. At 753, the ISDEX is down 12.5% for the
year. To reach plus territory, the index of 50 ‘Net stocks needs to get to

A half-dozen ISDEX tickers attained double-digit gains this week.
Ironically, though, Yahoo wasn’t one of them because Wednesday’s gains came
after three straight days of losses as the market braced itself for what it
thought would be a disappointing quarterly report. Instead, YHOO saw revenue
more than double and net profit easily top estimates.

Let’s look at the top ISDEX movers this week:

VerticalNet , up
30.7% – Shares of the online network of 56 industry-specific trading sites
have advanced for five straight days, including a 16% jump on Wednesday.
Other than the general market rally, there are no catalysts to explain
VERT’s recent gains. Right now VerticalNet is trading around 81x trailing 12
months’ revenue of $46.4 million. Not an exorbitant valuation relative to
the triple-digit valuations that were common among ‘Net companies just four
months ago, but pricey these days, especially given the company’s growing
losses (16 cents per share in Q1, up from 14 cents per share in Q4 ’99).
Keep an eye out for Q2 earnings in a couple of weeks.

CNET Networks , up
26.2% – The online high-tech news and information provider was headed for a
loss this week until Wednesday, when it rode the market rally (and, to a
lesser extent, the announcement of several customer wins) to a 36.1%
increase. CNET continues to defy content doomsayers with strong revenue
growth. Its challenge is to continue that growth as it continues to expand
beyond the tech and business audience to a wider consumer market. That means
increased sales and marketing expenditures. Last quarter CNET reported its
first net loss since 1998, though it had operating income of $5.6 million,
up from the $2.1 million in Q1 ’99. CNET’s Q2 report should be out next

Other big ISDEX gainers were Internet consulting and services provider MarchFirst and
supply-chain software vendor i2 Technologies
, each of which rose 21.7%.

There was one big loser on the ISDEX this week, and that’s BroadVision , which
tumbled 27.1% despite joining Wednesday’s ‘Net ticker comeback. Since
bottoming out in mid-April, it’s been choppy going for the e-commerce
application provider. The latest downturn was caused by the company’s recent
loss of American Airlines as a Web site client to Art Technology Group .
Shares fell 25.4% Friday after the news came out. The market over-reacted,
however, since the airline is not one of BVSN’s major clients.

News Around the Web