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Weakness hits all net stocks according to Dow Jones article below...
America Online Inc.
Dow Jones Newswires -- February 8, 1999
Internet Stocks Down With Broader Market Monday
NEW YORK (Dow Jones)--Many of the high-flying Internet stocks are down with the
broader market Monday, although there were no signs of the type of massive correction
that many fear will hit the sector sooner or later.
Web stocks have run up sharply in recent months on investor enthusiasm over the
commercial potential of the Internet. While that has led some on Wall Street to compare
ballooning Web stock valuations to a bubble that is on the verge of popping, other insist
that at least some Internet names will grow into their valuations.
"The wealth creation in this business will be greater than anyone has ever seen before,
although only a few companies are likely to really excel," Morgan Stanley Dean Witter
analyst Mary Meeker wrote in a research note Monday.
Still, Meeker added that a 25% correction in the group would be "healthy."
According to Jefferies & Co. analyst Bruce Smith, many Web companies could face
seasonal slowdowns in the first quarter after the holidays drove robust sales on the Web
in the fourth quarter.
"Seasonality will start being an issue for a lot of these stocks in the first quarter," Smith
said. "We've gone through the euphoria of the fourth quarter and now we're back to
reality."
He added that he has heard that after paying for high-priced placements on the big Web
networks, some electronic retailers are "not satisified with what they're getting for their
money."
While the networks may be delivering enough traffic to the online merchants, that traffic is
not producing enough sales for them, Smith explained.
"A lot of real estate was overpaid for," he said, adding that some of these deals could
therefore be renegotiated.
In active trading Monday, America Online Inc. (AOL) was down 4 9/16, or 2.8%, at 159
7/16. Yahoo! Inc. (YHOO) was down 11 3/8, or 6.6%, at 161 3/8. Excite Inc. (XCIT) was
down 2 9/16, or 2.6%, at 95 3/4. Lycos Inc. (LCOS) was down 6 1/16, or 4.4%, at 130
15/16. Infoseek Corp. (SEEK) was down 4 1/4, or 6.1%, at 65 3/8. And Amazon.com Inc.
(AMZN) was down 6, or 5.2%, at 109 7/8.
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