Talk about landing a 1-2 punch. This was one that light heavyweight champ Roy Jones Jr. would be proud of.
Internet stocks were reeling on the heels of an article in
that focused on Net companies running out of cash, along with the
revision in earnings from e-commerce software company
. MicroStrategy was down 131 1/4, or 57.9%, to 95 1/2 in recent trading.
TheStreet.com Internet Sector
index was down 51.84, or 4.1%, to 1220.77.
TheStreet.com New Tech 30 was down 27.16, or 3.4%, at 782.48.
Internet software stocks were crumbling.
was down 20 1/8, or 10%, to 180 3/8;
was off 26 1/2, or 20.2%, to 105; and
was down 26 1/4, or 11%, to 210.
Meanwhile, research analysts were scrambling to try and discredit the article in
and were coming to the defense of some of the companies.
analyst Anthony Noto put out a note on e-tailers and indicated that category leaders such as
have sufficient cash through 2000. Goldman has done underwriting for all these companies except Amazon.
Noto also listed a number of companies, which he indicated as "less likely to be successful as stand-alone companies, are potential acquisition targets." Among the e-tailers that Noto wrote will need financing this year, but will have the most difficulty getting it were
CIBC World Markets
came to the defense of
, which was mentioned as running out of money in July. CIBC, which has done underwriting for Interliant, wrote that the company will be funded into the first half of 2001 after its $150 million debt offering from February along with other equity investments. Interliant was down 1 3/8, or 3%, to 43 1/2 in recent trading after reaching a low of 42 5/8.
Salomon Smith Barney
analyst Glen Santangelo questioned the article's use of fourth-quarter results to extrapolate what will go on in the future. Specifically, he wrote that it was "inaccurate to analyze
based upon fourth-quarter results in light of all the recent acquisition activity and the $930 million investment made by
in the current quarter. He estimated that Healtheon/WebMD will have close to $1.5 billion in cash on its balance sheet assuming all of its pending transactions close. Healtheon/WebMD was down 2, or 6%, at 31 5/8 in recent trading.
Santangelo also wrote that the study's financial assessment of
was "highly inaccurate." Santangelo estimated a 100% increase in revenue this year and a 56% increase in 2001. Salomon has not done underwriting for either company. TriZetto was off 8 7/8, or 15%, at 49 5/8.
CEO Charles Johnson Jr. appeared on
, saying the article was "completely erroneous" indicating that the company had over 10 months of cash remaining and said it has a burn rate of $4 million a month, but has $165 million in cash. PurchasePro was down 13 3/8, or 8.9%, to 138 3/8.