Barnyard critters make headlines...it's a little wordy but interesting, imo.
By Bambi Francisco, CBS.MarketWatch.com
Last Update: 3:29 PM ET Sep 27, 2000
NEW YORK (CBS.MW) - Another revenue warning in the dot-com field -- this time from Priceline.com -- sent shares of one of the early Net revolutionaries reeling, giving the bears all the more reason to take the front lines.
Priceline.com (PCLN) dropped $8.27, or 44 percent, to $10.33, a fresh 52-week low after alerting the Street that September airline ticket sales weren't up to snuff. The sell-off occurred on 10 times the average daily volume.
Other veteran Internet names were tackled as well.
Yahoo (YHOO) lost 13 percent to crack the $100 mark. Shares traded at $89 on volume of 23.3 million shares in recent trading. The average daily trading volume is 8.2 million shares.
"Market psychology has changed completely, with Priceline's warning raises concerns about whether the upside potential for a highly-valued stock like Yahoo is sufficient to offset the downside risk," said Jordan Rohan, an analyst at Wit SoundView, who downgraded Yahoo early September based on valuation.
Yahoo trades at 53 times '02 cash flow estimates vs. 20 times for AOL and 14 times for Disney, Rohan said.
Since 80-plus percent of revenue comes from advertising and commerce, "Yahoo is a media company and therefore should be valued like one," he added. The last time Yahoo shares closed below $100 was in November of last year.
Moreover, AOL (AOL) and NTT DoCoMo's partnership raises question about Yahoo's strategy to get in front of the many consumers accessing the Internet via wireless device in Japan.
Yahoo and Priceline weren't the only victims in Wednesday's wash out. AOL fell 1 percent to $54. Amazon.com (AMZN) lost 5 percent to $37; EBay (EBAY) gave up 6 percent to $66.53.
The Goldman Sachs Internet Index fell 3 percent, after falling 3 percent Tuesday. Merrill Lynch Internet Holdrs gave up 5 percent. The American Stock Exchange's Net index tumbled 1 percent.
More bears are taking the front lines and asking the same question, 'what is the next shoe to drop,'" said Brian Belski, fundamental strategist at U.S. Bancorp Piper Jaffray.
That next shoe might be another earnings shortfall.
Who's going to make the quarter?
As the door to the September quarter shuts, some companies are scrambling to make their numbers. For some, the extra days just don't matter.
Priceline (PCLN), whose market cap once topped $20 billion, saw that value shrink down to less than $2 billion. The pioneer of name-your-price airline tickets and services became the latest dot-com to warn that it would miss third-quarter expectations.
A decline in the number of airline tickets sold and a decline in the average airline ticket sale were to blame. Weakness in September airline ticket sales could result in a $20 million decline in ticket sales from the previous quarter, the company said. That loss would take Priceline's top-line growth to between $340 and $345 million for the quarter, or 8 percent below the consensus estimate.
While sales would be off, Priceline guided analysts to expect their bottom-line number to be flat with the second quarter. Priceline, which had guided analysts some time ago to expect a break-even quarter soon, did not give any indication for the upcoming quarter, said Michael Legg, an analyst at Jefferies & Co., who downgraded Priceline to a "hold" from a "buy."
Moreover, the upcoming fourth quarter is a seasonally slow one for Priceline.
Priceline's shortfall follows last week's string of warnings that began as early as the start of September from ad-supported companies and I-consultants, such as TheStreet.com (TSCM), MediaPlex, Avenue A (AVEA) and US Interactive (USIT) and Viant (VIAN).
B2B crossfire
VerticalNet (VERT) bounced 15 percent to $35 to recoup nearly all of its losses Tuesday. Shares plunged after Merrill Lynch analysts noted that at about 10 times 2001 revenue, VerticalNet is "not inexpensive," especially when the company's e-commerce revenue strategies are still emerging.
But on Wednesday, CS First Boston analysts defended VerticalNet by suggesting (without naming names) that the call made by one of its "competitors" was "ridiculous." VerticalNet "possesses valuable assets that are under-appreciated by the market," the analysts said.
Too much of a good thing
Meanwhile, Internet Capital Group (ICGE), which owns 36 percent of VerticalNet and whose fate rides on the success or failure of many B2B hopefuls, watched its stock get clocked Tuesday. By Wednesday, the buyers weren't exactly stampeding over one another to get in.
Indeed, having exposure to a basket of Internet stocks was once something to boast about. Now, those assets may have become a liability.
After tanking 16 percent Tuesday, ICG fell 13 cents to $17.56, yet another 52-week low. Safeguard Scientifics (SFE) jumped 2 percent to $21, after losing 8 percent on Tuesday. Safeguard has direct ownership in 49 partner companies and owns 14 percent of ICG.
CMGI (CMGI), with exposure to dot-coms, business-to-business companies and Net infrastructure names, gave up 6 percent to $28, a new 52-week low. |
