Shares in portal sites, which enjoyed meteoric rises yesterday, fell today as analysts feared the issues are overvalued.
"Stocks that have almost doubled in a week are bound to experience extreme volatility," said Bruce D. Smith, an analyst with Jefferies & Company in New York. "Could this be the end? Yes. Is it? I don't know."
Yahoo shares dropped 13.375 or 3.22 percent to close at 402, as Wall Street received the company's quarterly earnings report today. The portal heavyweight handily beat analysts' expectations of 16 cents per share for the fourth quarter of 1998, reporting net revenues of $76.41 million and net income of $25.043 million or 21 cents per share.
Shares of America Online ended the day down 11.5 or 6.96 percent at 153.625; Excite was down 8.625 or 10.30 percent at 75.125; and Lycos, rumored to be a buyout candidate last week, was down 26.5 or 20.23 percent at 104.5.
Wallace cited the price appreciation in Netscape shares associated with its pending acquisition by AOL. He kept a "strong buy" rating on AOL, but noted that "if the deal breaks for some reason, there is about 25 points in downside risk to Netscape shares."
Internet registry Network Solutions also dropped today. Shares ended the day down 34.0625 points or 15.27 percent to 189. The downturn came in spite of news that the firm's registrations were up significantly in 1998 over the previous year, and in spite of the news that it was reiterated "strong buy" by analyst Paul L. Merenbloom at Prudential Securities.
Bloomberg and Reuters contributed to this report.