Net Stocks Continue to Head Lower

Cautionary statements from Yahoo! Inc. along with the highest bond yields in 2-1/2 years were pressuring Internet stocks in midday trading Wednesday.

At 11:30 a.m. Eastern,’s Internet Stock Index had dropped 14.34, or 1.73 percent, to 816.86, the Nasdaq Composite was off 28.97 to 3,892.22 and the Dow Jones industrial average had climbed 78.57 to 11,589.65.

Yahoo! (YHOO) had fallen 17-7/8 to 379-1/2. In its earnings report Tuesday, the company warned its current level of revenue growth will not be sustainable.

That didn’t stop several investment banks from raising their targets on the portal. Dain Rauscher Wessels and Lehman Brothers both hiked their price target to $450 from $225. Merrill Lynch’s Henry Blodget raised his fiscal year 2000 estimates to 79 cents from 68.

S1 Corp. (SONE) had jumped 7-23/32 to 80-21/32. Robertson Stephens Wednesday initiated coverage of the company, which provides Internet solutions for the financial services industry, with a “buy” rating.

Razorfish Inc. (RAZF) had jumped 6-13/16 to 88-1/16. The company Wednesday announced a 2-for-1 stock split.

Digex Inc. (DIGX) had gained 4-1/4 to 69-13/16. The Web hosting firm signed a joint venture with Compaq Computer Corp. (CPQ) and Microsoft Corp. (MSFT) to develop new services for business customers. As part of the deal, both companies will invest $50 million each in Digex.

Lycos Inc. (LCOS) was up 4-13/16 to 75-1/16 after Prudential’s Volpe Technology Group initiated coverage with a “strong buy.” Inc. (DSCM) was off 2-3/8 to 30-1/8. The online pharmacy Wednesday bought cosmetic retailer for $42 million in stock.

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