Net stocks cool off after rally
Following an extended rally in the last few weeks, most Internet shares are trading lower. The exceptions are the high-flyers.
Notable exceptions were the high-flyers from yesterday's rally. Internet computer and software vendor Egghead soared in early afternoon trading before closing up only 4.64 percent at 15.5. It followed yesterday's rise of more than 64 percent to reach a new 52-week high on news the company had experienced quicker-than-expected growth.
San Mateo, California-based Inktomi gained another 3.9 percent, at 76.5, after chairman and chief executive David Peterschmidt told CNBC that the company would turn a profit during the second half of 1999. The company, which saw its stock soar more than 53 percent yesterday after two investment firms initiated coverage with favorable recommendations, was helped by yet another report today from BT Alex Brown that issued a "buy" rating.
Overall, however, Internet stocks closed down, led by Internet advertiser DoubleClick, which fell 17.68 percent to 62. Last week, the shares soared after the company issued a press release--criticized as misleading by a competitor--that claimed it had the "third largest audience reach on the Internet."
Search engine companies, which have fared especially well in the recent bull market, also declined. Lycos, for example, lost 14.63 percent to close at 85. The stock was one of the Internet sector's superstars yesterday, gaining more than 25 percent after announcing a 2-for-1 stock split. Excite closed down more than 10 percent at 96.25, while Yahoo, which yesterday flirted with the 200 mark, retreated 4.14 percent to close at 191. Infoseek closed down 5.75 percent at 35.3125.
Other Wall Street darlings also declined. Online book retailer Amazon.com closed down 12.46 percent at 122.125. MindSpring, which recently announced a stock split, was off 12.03 percent at 93.25, while EarthLink, a competing Internet service provider, was down 11.25 percent at 73.21875.
"This whole group has had such a tremendous rise in such a short period of time, it's understandable to see a slight pullback," said Ryan Jacob, portfolio manager at The Internet Fund. "Clearly, there's no news coming out that would precipitate" the fall-off.
Other exceptions to today's cooling off included online music seller N2K, which closed up 3.4 percent at 22.3125, Ziff-Davis, which was up more than 2 percent at 15.75, and Concentric Network, which was up 6.07 percent at 37125.