Seismic Studies: Internet Stocks After The Selloff

The Los Angeles area is famous for many things: tinseltown, silicone (not silicon per se), amusement parks, and shaking up the
terra firma on a regular basis with earthquakes.

Therefore, it’s ironic that every year as Spring Internet World gets sprung, the Internet stock sector gets slammed. I saw this
phenomenon last year and again this week as ISDEX peaked early to new highs and then settled April 15 in a two-day
trembler after profit taking.

Combine the geography and lexography and the only word for it is an “iQuake,” a seismic jolt through the Internet stock
landscape. The 2.3% ISDEX drop doesn’t reflect the drop and slight rebound. April 14 ISDEX lost 55 points, more than 3x
April 15’s ripple.

Even so, about half the stocks in ISDEX ended the week since April 6 up. But today let’s see who’s down.

The beauty of us “seismologists” surveying the fallen amid the rubble is simple: stocks got taken along for the wave ride
down for no other reason than being close to the epicenter.

If the correction was due to underlying fundamental reasons like revenue, earnings shortfalls, or greater-than-expected losses,
lack of traffic growth, and the fact that the bearded ladies investment club logged off eBay, then I would be worried. But I don’t
think that’s the trigger here.

The drop from all-time highs was simply the result of investors withering nerves as the skyscrapers swayed in the cloud-driven
heights while the Dow and NASDAQ looked like one-story flats.

Seeing the gains sent investors to the “take profit now mode.” I think investors should always know what they’re comfortable
with on the high side and low side–their tolerance for reward and risk–and consider taking their cost basis off the table as
their positions move around.

So let’s take a walk downtown after the iQuake and see which stocks look like they could rebound now that I think the dust
may have settled a bit:
























































































































































































































































































































































































































ISDEX ®

 

15-Apr-99

% change

Point change

The Internet Stock Index

 

close

from

from

www.isdex.com

 

 

06-Apr-99

06-Apr-99

 

 

 

 

 

ISDEX

 

602.99

-2.3%

-14.50

NASDAQ

 

2,521.77

-1.6%

-41.40

DJIA

 

10,462.72

5.0%

499.23

 

 

 

 

 

Verio

VRIO

$65.00

55%

$23.00

CyberCash

CYCH

$20.44

40%

$5.81

Inktomi

INKT

$120.88

35%

$31.25

E*TRADE

EGRP

$101.44

33%

$25.44

Security First Technologies

SONE

$115.00

29%

$26.00

PSINet

PSIX

$54.69

21%

$9.56

CMG Info

CMGI

$276.25

20%

$46.63

eBay

EBAY

$178.88

18%

$26.88

Go2Net

GNET

$157.88

17%

$23.44

Axent

AXNT

$10.13

16%

$1.38

CNET

CNET

$127.13

15%

$16.50

Infospace.com

INSP

$119.19

12%

$12.94

Xoom.com

XMCM

$82.00

9%

$6.44

Open Market

OMKT

$15.00

7%

$1.00

CheckPoint Software

CHKPF

$32.06

6%

$1.94

Doubleclick

DCLK

$127.88

6%

$6.88

Onsale

ONSL

$35.06

5%

$1.69

iVillage

IVIL

$104.88

3%

$3.25

24/7 Media

TFSM

$49.81

3%

$1.50

Sportsline USA

SPLN

$52.75

3%

$1.38

VocalTec

VOCLF

$10.88

2%

$0.19

Beyond.com

BYND

$32.00

2%

$0.50

Earthlink Network

ELNK

$73.00

1%

$0.44

CDnow

CDNW

$15.94

-1%

-$0.13

Excite

XCIT

$146.94

-2%

-$3.00

Security Dynamics

SDTI

$16.50

-2%

-$0.38

Mindspring

MSPG

$102.75

-2%

-$2.63

Preview Travel

PTVL

$20.38

-3%

-$0.56

Verisign

VRSN

$156.56

-3%

-$4.56

Cisco

CSCO

$110.31

-4%

-$4.94

@Home Network

ATHM

$152.50

-6%

-$9.63

Broadcom

BRCM

$65.50

-8%

-$5.38

RealNetworks

RNWK

$180.00

-8%

-$15.44

GeoCities

GCTY

$128.00

-8%

-$11.50

Amazon.Com

AMZN

$167.25

-9%

-$15.63

Concentric

CNCX

$88.00

-9%

-$9.00

Egghead.com

EGGS

$15.63

-9%

-$1.63

Yahoo!

YHOO

$194.63

-9%

-$20.25

Prodigy

PRGY

$35.50

-10%

-$3.75

Broadcast.com

BCST

$140.50

-10%

-$15.88

Lycos

LCOS

$94.56

-13%

-$14.25

Exodus

EXDS

$69.25

-13%

-$10.75

Cyberian Outpost

COOL

$16.50

-13%

-$2.56

America Online

AOL

$143.88

-14%

-$23.63

Broadvision

BVSN

$51.38

-17%

-$10.38

Network Solutions

NSOL

$93.50

-19%

-$22.00

Infoseek

SEEK

$64.63

-23%

-$19.44

ISS Group

ISSX

$52.00

-25%

-$17.75

Network Associates

NETA

$15.25

-30%

-$6.69

USWeb

USWB

$27.06

-33%

-$13.06

For good reason Network Solutions (NASDAQ:NETA) got hammered on accounting mixups and SEC probing
around. But what to me should be a ballpeen experience turned into a sledgehammer-fest as NETA tanked to new lows.

Despite the accounting guffaws and management mishaps, the products sell well and have a huge installed base, which to me is
reflected in its sales and security software presence. NETA is barely off its 52-week low but well off its 52 week $67.6875
high.

Anytime I see Internet bellwether AOL (NYSE:AOL) lose a few points on no news it signals that Wall Street probably
popped a few “stupid pills.” For well over two years I’ve called AOL the “next Microsoft.” But the analogy isn’t truely 100%. AOL defines the Internet experience as few others, a better role in a service is king era.

I know its market cap looks frothy on some levels but I continue to be a fan of Web host firm Exodus (NASDAQ:EXDS) , down 13% since April 6.

EXDS stock just split 2-for-1 April 12. What attracts me to it is the fact Yahoo!, Lycos, Hotmail, Inktomi and GeoCities use
Exodus to host their content. EXDS grows with them in the background in a “Switzerland” of the Internet position.

So when iQuakes come along as they did the past two trading days keep in mind that not everything that sways deserves to fall.

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