Internet Telephony Stocks Fall On Profit Taking-Blaylock
DOW JONES NEWSWIRES
By Adam L. Freeman
Of DOW JONES NEWSWIRES
NEW YORK -- Internet telephony shares experienced significant static Monday, diving as some investors cashed in on the sector's Thanksgiving rally.
On Monday, DeltaThree Inc. (DDDC) fell as much as 28%, 8X8 Inc. (EGHT) retreated 24%; Vocaltec Communications Ltd. (VOCL) lost 15%; and Net2Phone Inc. (NTOP) declined 8%.
Last week, those same stocks showed strong gains. Specifically, DeltaThree rose 69%, 8X8 surged 105%, Vocaltec jumped 88% and Net2Phone added 36%.
The stocks are falling on momentum, said Ari Moses, an analyst with Blaylock & Partners, a New York boutique investment services firm, which was recently involved in a secondary offering of Net2Phone shares.
In recent trading, DeltaThree shares recently fell 18% to $3.49, 8X8 declined 21% to $5.93, VocalTec lost 14% to $5.22 and Net2Phone was down 7% to $5.80.
Internet telephony, or Voice-over-Internet protocol companies, enable customers to place telephone calls over high-speed online connections. The new service is for the most part free of regulations, enabling providers to realize profits relatively unhindered by government.
"It's a very hot sector right now," said Moses, who owns no shares of companies participating in the sector.
Last week, the sector benefited from upbeat comments from executives and analysts. The gist being that demand is finally picking up for this technology, which has been discussed for a while but has suffered from growing pains.
A Federal Communications Commission hearing on the sector Monday probably has little to do with the fall in Internet telephony stock prices, said Paul Glenchur, an analyst with Charles Schwab Capital Markets who owns none of the companies' shares.
"Nothing definitive is coming out of" the meeting, he said. It will just highlight a number of issues that in the future may lead to regulation.
Earlier, in published comments, the analyst said he believes "some regulation of the service is inevitable despite a recent federal court decision exempting Internet telephony from traditional telecom rules."
However, in his opening remarks to the FCC forum, Michael Powell, the FCC chairman, said he sees the government keeping its hands off the new sector.
"As one who believes unflinchingly in maintaining an Internet free from government regulation, I believe that IP-based services such as VOIP should evolve in a regulation-free zone," Powell said in a statement published on the FCC Web site. "In my view, that policy environment must begin with the recognition that the Internet is inherently a global network that does not acknowledge narrow, artificial boundaries."
Powell did concede that health, safety and welfare concerns may lead to a
rise in state concerns, "and it might be proper for them to play a role in these
areas." However, according to the chairman, these are interests that should
be addressed as issues separate from the business and investor component.
Economic regulation is "entirely another matter, and we should approach that area of regulation with significant skepticism," Powell said.
-By Adam L. Freeman, Dow Jones Newswires;201-938-5023; adam.freeman@dowjones.com
Updated December 1, 2003 12:51 p.m. |
