Ulticom Led Net Stocks In June

Some unfamiliar names rose to the top of internet.com’s Internet Stock Index, the ISDEX, in June.

The ISDEX slipped about 3% in June, ending the month down 7 points to 245.85. But another flat month for the index masked the ongoing process of sorting winners from losers that investors have been engaged in since the April 4 bottom.

First of all, a caveat: We did not include Friday’s trading data in June’s calculations, because the network outages at the Nasdaq created some bizarre price swings in the last hour or two of trading, including 10% swings in big stocks like Cisco and Oracle . If we included Friday’s data, Liberate would go from ninth to first based on a 20% surge in the final hour of trading.

Topping the list of Net winners through June 28 was network signaling software firm Ulticom , which rose 28% last month. The company began the month by beating estimates by a penny with 10-cent earnings, up more than 200% from a year ago. An expanded relationship with IBM also boosted the stock.

Coming in second was Homestore.com , up 27% for the month on continued strength in home sales. S1 had another good month, rising 26% during a strong month in general for financial services application firms.

Hotel Reservations Network came in fourth, rising 21% through June 28. And eBay rounded out the top five, climbing 15% through June 28.

So what, if anything, do the winners have in common? Four of the five – Ulticom, Homestore, Hotel Reservations and eBay – are profitable and growing. S1 has said it will be profitable on an EBITDA basis by the end of the year. If investors are focusing on results instead of good stories, that would be a positive shift indeed.

At the bottom of the list for June, not surprisingly, could be found unprofitable companies, led by Exodus , which fell 73% last month on an earnings warning, a credit rating reduction, and downgrades galore. [email protected] lost 46%, Net2Phone dropped 42%, Commerce One fell 40% (but rebounded strongly Friday on news of an investment from SAP), and CacheFlow , which dropped 33%. All of those companies provide real services and technology, but investors are seeking profitability, and of the five, only Commerce One is expected to turn profitable next year.

Two other items: today marks the quarterly rebalancing of the 50-stock ISDEX. In is Sun Microsystems , and out is Scient . And the Morning Report will not be published for the remainder of the week; the Market Close will continue to be published this week (except for the July 4 holiday; the market closes at 1 p.m. tomorrow, July 3). Happy holiday.

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