NEW YORK (CBS.MW) -- Internet stocks steadily drifted lower
Monday afternoon as a decision on interest rates by Federal Reserve
policymakers due Wednesday loomed over a market bracing for yet
another storm of Internet IPOs.
The Goldman Sachs
Internet Index slipped
2.2 percent after losing
3 percent last week.
If the index fails stabilize
over the next few days,
the current second
quarter could be Net
stocks' worst ever. Internet shares' to-date record worst performance in
a given quarter was the first three months of 1997, when the 15-stock
index plunged 19.4 percent. As of Friday's close, the key index was
down 19.1 percent on the quarter.
The Amex Internet Index was down 1.4 percent. Among the high profile
Net stocks losing ground: America Online (AOL: news, msgs) fell 3 1/8,
or 3 percent, to 99 3/4, Yahoo (YHOO: news, msgs) was off 4 7/8, or 3
percent, to 142, Amazon.com (AMZN: news, msgs) sank 5 9/16, or 5
percent, to 104 9/16, EBay (EBAY: news, msgs) gave up 7 1/8, or 5
percent, to 128 7/8.
A sure thing
By many accounts, economists have guided the Street to discount a 25
basis point rate hike by Federal Reserve policymakers. The FOMC kicks
off its two-day meeting Tuesday with an announcement expected by 2:15
p.m. eastern time. Wednesday. Should the Fed do the deed, it would be
the first time the Fed raised interest rates since March, 1997.
But whether the Fed will raise interest rates another 25 basis points on
August 24, the next time committee members meet at the policy-setting
round table, is another question. That risk also seems to be discounted.
See bond report.
So, barring any surprises, the negative news appears
to be priced into the market and the real key is
quarterly earnings.
"Investors may be looking for more than beyond
what happens to interest rates," said Sara Zeilstra, an
Internet consumer analyst at Warburg Dillon Read.
"We're at the end of the quarter, so now's the time to
focus on performance."
"What the Fed does doesn't matter a whole lot,"
said Cern Basher, a portfolio manager at Provident
Investment Advisors. "These few (Net) companies
will be driven by the fundamental characteristics and
to the extent they can achieve good growth, they'll do
well."
Cyber storm
*****Once again, a barrage of Net IPOs are expected to
flood the market. There are 12 Internet-related IPOs
set to price this week. This follows the 11
Net-related offerings last week.
It was just a month ago that Net guru Mary Meeker, Internet analyst at
Morgan Stanley, aggravated the Internet sell-off, by warning of a Net IPO
glut. ******
Still, that hasn't stopped Morgan from continuing to bring their deals to
market. AskJeeves, the virtual butler at your service, makes its debut this
week. Morgan Stanley is the underwriter.
USA.Net, which will begin trading this week under the symbol (MBOX:
news, msgs), is the largest IPO slated. Bear Stearns, the lead banker, is
offering up 9 million shares between $15 to $17, for a total of $136
million.
Goldman Sachs leads the second largest deal, Network Plus. The
Massachusetts-based company, which is a provider of broadband data
and telecommunications services, is expected to offer 8 million shares,
raising $120 million. See IPO report.
Last week's big winner Juniper Networks (JNPR: news, msgs) fell 4 3/8,
or 4 percent, to 94 1/2. But that's chump change for those who got in at
the offering price of $34 last Friday. The Internet networking specialist,
based in Mountain View, Calif., shot up to 105 when it opened. By the
end of its debut day, the company was worth $5 billion.
Iris |
