The Anglo File: Freeserve Falls for All the Wrong Reasons

LONDON -- Freeserve (FREE Quote) is falling. The question for investors is whether the company's shares -- the value of which has been cut in half over the past month -- are falling for the right reasons.

Shoving the shares of the U.K.'s largest Internet companies off its 52-week high seen in early March was a move toward unmetered Internet access by rivals Alta Vista and cable company NTL (NTLI Quote).

Freeserve, one of the first Internet service providers to drop subscription fees in the U.K., still collects a cut from the revenue on metered calls to the Internet. Matching its competitors, Freeserve said that it too would offer unmetered access, a move that the brokerage Cazenove & Co. believes could eliminate three-quarters of revenue on metered calls by 2002.

That change in strategy was unveiled just weeks before Internet stocks around the world began plunging from their lofty valuations as investors rediscovered their fondness for old-world profits. Furthering the dot-com malaise were several high-profile European IPOs that flopped, such as Lastminute.com and World Online. On Wednesday, Freeserve shares closed down 44 pence, or 10.2%, at 388. ...