CMGI, Akamai, Others Plunge on Profit, Interest-Rate Concerns
Andover, Massachusetts, April 14 (Bloomberg) -- CMGI Inc.,
Akamai Technologies Inc. and other Web stocks plunged, capping a
weeklong decline in Internet-related shares spurred by investor
concerns about widening losses and higher interest rates.
CMGI shares tumbled 10 3/16, or 15 percent, to 56 1/16 in
midafternoon trading. The Andover, Massachusetts-based Internet
venture-capital company has lost 40 percent of its market value
this week. Cambridge, Massachusetts-based Akamai, whose service
speeds the flow of data on the Internet, dropped 19 5/16, or 22
percent, to 68 11/16. It has fallen 53 percent this week.
Most Internet companies are expected to report wider first-
quarter losses because they spent more on marketing to gain
customers. Those larger losses, combined with the threat of higher
interest rates, which raises companies' borrowing costs, have made
investors skittish about the viability of some online ventures.
``It seems like there's been a flight from the concept stocks
to companies that actually have earnings,' said Alan Loewenstein,
co-manager of the John Hancock Global Technology Fund.
Internet stocks fell as part of a broader decline in the
Nasdaq Composite Index, which dropped 223.62, or 6 percent, to
3453.16. Since reaching its March 10 record, the index has lost a
third of its value as investors have concluded that Nasdaq stocks,
five times more expensive compared with earnings than Standard &
Poor's 500 shares, had grown too pricey.
The Bloomberg U.S. Internet index dropped 14.24, or 8.6
percent, to 152.04.
``The same momentum that drives them up, drives them down,'
said William Blair analyst Abhishek Gami. His advice to investors
is to grab ``a bottle of beer and a ball game.'
Hard-Hit Software
Red Hat Inc., which sells Linux operating-system software and
services, fell 2 1/2 to 25 1/2 and has dropped 33 percent this
week. The money-losing company, based in Durham, North Carolina,
has seen its shares decline 76 percent this year.
Companies that target business-to-business electronic
commerce have also been hit hard. Ariba Inc. and Commerce One
Inc., which make software to process purchase orders on the
Internet, have seen their market values nearly halved.
Ariba reported better-than-expected fiscal second-quarter
revenue, although its loss widened to $125.9 million from $5.77
million. It shares have plunged 37 percent since Friday's close.
Rival Commerce One, which is also losing money, has dropped 50
percent during that same time.
Internet stalwarts such as Yahoo! Inc. and America Online
Inc., both of which are profitable, haven't been immune to the
steep stock drops. Yahoo fell 10 9/16 to 125 9/16. It has dropped
17 percent this week and is down 47 percent since its high of 237
1/2 on Jan. 3.
America Online declined 3 3/16 to 56 1/16 and has fallen 19
percent this week.
Money managers have expressed uncertainty about what course
of action to take.
``Do we sell here? Do we buy here?' said Gary Dvorchak, a
technology analyst at Provident Investment Counsel. ``There's more
downside. It's ugly but I don't think it's a bottom.' |
