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It's been a tough morning for Internet stocks, as a couple of separate events conspired to push the sector lower. Internet Sector

index was down 39.54, or 3.11%, to 1233.07. New Tech 30 was down 12.9, or 1.59%, to 796.75.

Members of the New Tech 30 may have been feeling impact from the fallout at software firm


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, which

revised its revenue figures for the past two years. It was down 128 3/8, or 56.6%, to 98 3/8. Our own

James Cramer

looked at the issue in an earlier


Internet stocks of all shapes and sizes were impacted by the lead story in


about Internet companies running out of cash. The article indicated that 51 Net firms will burn through their cash within the next 12 months, and it ranked 207 Internet stocks.

Among the stocks mentioned in the article,



was down 27/32, or 12.5%, to 5 29/32;


was off 1 5/16, or 15.7%, to 7 1/16;

Secure Computing


was down 2 3/4, or 12%, to 20 1/8;


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was down 1 1/8, or 9.5%, to 10 3/4; and

Pilot Network


was down 4 7/8, or 9.8%, to 45.

In response to the article,

Merrill Lynch

analyst Henry Blodget attempted to defend Net stocks. Blodget wrote that he generally agreed with the article's conclusions, indicating that he has argued that up to 75% of Internet companies "will never make money and will eventually disappear, either through consolidation or business failure." However, Blodget wrote that he "would caution against wholesale application of the methodology used in the study," adding that the study uses operating losses as a proxy for cash flow, which, he wrote, "is not always appropriate."


was down 7 1/8, or 7.9%, to 82 7/8 because of a separate article in


that indicated a number of large hotel companies were talking about starting a Web site to centralize hotel room offerings. The article mentions priceline,




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as potentially being impacted by such an alliance.


was down 14 49/64, or 9.7%, to 136 63/64 despite

announcing a three-year alliance with

America Online


to create a B2B exchange. Under the agreement, the companies will codevelop business exchange for AOL's business users across AOL,, CompuServe and


Netcenter. will provide the technology for the interactive marketplace, which allows users to source, bid, negotiate, buy and sell their products and services over the Web. PurchasePro had surged Friday, closing at 151 3/4 after trading as low as 128.


was up 5/16, or 5.2%, to 6 5/16 after the online provider of pet products announced an agreement with



to be a featured store on

Yahoo! Shopping





was down 1 1/8, or 3.8%, to 28 1/8. According to the Heard on the Street column in

The Wall Street Journal

, talks between E*Trade and

American Express

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about a buyout never crystallized and were dormant. Also, the column reports that talk persists that E*Trade might team up with

Goldman Sachs

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