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Monday February 8, 3:31 pm Eastern Time
Internet stocks retreat on valuation jitters
NEW YORK, Feb 8 (Reuters) - Internet stocks were caught in a web of selling on Monday amid widespread talk about overvaluation in the sector.
The decline in Internet stocks was broad-based with Yahoo! Inc. (Nasdaq:YHOO - news) down 12-5/8 to 160-1/8 and America Online (NYSE:AOL - news) down 6-1/16 to 158-15/16.
Paul Bard, analyst at Renaissance Capital, said he thought the Internet selloff was ''spurred by the broader setback in the technology sector.''
The Renaissance analyst added that ''when you have companies with high valuations its hard to sustain those prices. There's a lot of volatility in the technology sector the sector really surged. so maybe they're giving back a little.''
The drop in the volatile Internet sector, atop the broader markets sell off, occured after Prudential Securities research director Ralph Acampora issued a report saying U.S. stocks could correct 5 percent to 10 percent.
A market source familiar with the report's content said Acampora's said computer and Internet stocks had risen so sharply that a decline of 5 percent to 10 percent in the sectors would not return them to ''normal'' levels.
''Ralph Acampora, that's what some people are blaming it on,'' said Jim Volk, co-director of institutional trading at DA Davidson.
Volk added that Internet stocks are the issues that have ''moved the farthest fastest.''
Internet IPOs took a hit in the selloff, with Internet service provider Pacific Internet (Nasdaq:PCNTF - news) dropping 9-3/4 to 38-1/4 after hitting an intrasession high of 88 on its first day of trading Friday after a debut with an initial public offering price of $17. Shares closed at $48 a share.
Another volatile Internet company that debuted Friday, Modem Media.Poppe Tyson Inc. (Nasdaq:MMPT - news), was off five at 40 on Monday. Shares had risen as high as 55-1/8 from its $16 IPO price and closed at $45. |
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