Banking on Net infrastructure, B2B
Yahoo sinks on ad concerns; DoubleClick warns
By Bambi Francisco, CBS.MarketWatch.com
5:52 PM ET Dec 11, 2000
NEW YORK (CBS.MW) - After a tough start, Internet shares tracked higher with infrastructure
and business-to-business names leading the advance.
Messaging and e-mail company Critical Path (CPTH: news, msgs) shot up 27 percent to $39.63.
Companies that accelerate the delivery of Web pages and support the delivery of rich media
content, such as Inktomi (INKT: news, msgs) , Akamai (AKAM: news, msgs) and Digital Island
(ISLD: news, msgs) , saw shares leap ahead of Tuesday's Streaming Media West conference in
San Jose, Calif.
Inktomi and Akamai jumped 17 percent and 13 percent, respectively. Digital Island pulled ahead
by 30 percent.
In the B2B sector, PurchasePro (PPRO: news, msgs) , which provides a Web-based
marketplace for small and medium-sized companies, saw shares run up 22 percent. See full
story.
Merrill Lynch Internet Infrastructure Holdrs, a basket of leading infrastructure companies, gained
5 percent. Merrill Lynch B2B Internet Holdrs ran up 7 percent.
The Goldman Sachs Internet Index (GIN: news, msgs) , which traded in the red in the early
going, rose 3.7 percent by the close, after leaping 19 percent last week, its sixth biggest weekly
jump ever.
Much of the advance came last Tuesday, when investors enjoyed a presidential-election and
interest-rate relief celebration. The Net barometer surged 15.9 percent on that day, its biggest
one-day jump this year.
Yahoo's diminishing fan club
But shares of Yahoo (YHOO: news, msgs) and DoubleClick (DCLK: news, msgs) came
under pressure on relentless advertising concerns.
Yahoo gave up 3 percent to $33.88 after a triumvirate of negative analysts' comments kept
worries about Web advertising and valuations alive.
After the bell, DoubleClick, a leading online ad-serving company, warned that it would report a
loss for the fourth quarter, missing expectations to turn a profit. Shares fell 6 cents to $11.94
ahead of the news. See full story.
Yahoo (YHOO: news, msgs) fell as low as $30.63 in the early going after Deutsche Banc Alex.
Brown, Robertston Stephens and Wit SoundView took shots at the company.
Deutsche Banc Alex. Brown analyst Andrea Williams Rice warned that Yahoo shares could
tumble another $20, or 57 percent, from last Friday's close of $34.94. At the level, Yahoo trades
at 61.6 times her '01 earnings estimate of 57 cents. But that is 2.9 times Yahoo's estimated
growth rate of 20 percent. To that end, Yahoo should trade at 30 times '01 earnings, she said.
"We believe that pressure is growing for Yahoo to partner with a media or wireless telecom
company, particularly one that could accelerate revenue growth outside the U.S.," said Rice.
WitSoundView analyst Jordan Rohan lowered his rating on Yahoo from a "buy" to a "hold,"
citing "continued deterioration of bulk banner advertising rates from over $2 six months ago to $1
currently."
Rice's valuation comments and Rohan's downgrade follows W.R. Hambrecht analyst Derek
Brown's warning that Yahoo could miss fourth quarter numbers. Merrill Lynch analyst Henry
Blodget shifted his revenue projections from the first half of '01 to the second half of '01. Both
Brown and Blodget made their negative comments last week. |
