Pulse: A Plunging Amazon Pulls Down Other Net Stocks - TheStreet

Amazon.com's (AMZN) - Get Report troubles usually begin after it posts its quarterly numbers, when investors bemoan that the online retailer is not showing a clear path to profitability. Amazon doesn't report earnings for more than a month, but its woes began today.

Felled by some cautious comments from

Morgan Stanley Dean Witter

analyst Mary Meeker, Amazon tumbled today, carrying other Internet stocks lower as well as hurting the rest of the technology sector. The

Nasdaq

ended the week down 91.45, or 2.3%, at 3845.39.

TheStreet.com Internet Sector

index ended off 45.59, or 5.2%, at 837.86 and was down around 60 points for the week.

Amazon closed down 8 1/8, or 19%, at 33 7/8 after Meeker said the company could fall short of her revenue estimates for the second and third quarters.

TheStreet.com's

Katie Hobson

got the lowdown on Meeker's call in an earlier

piece. In it, Meeker reportedly said that there won't be any upside to her revenue estimates of $600 million for the second quarter and $650 million for the third quarter, and there could even be "modest downside."

In addition, a negative report by

Lehman Brothers

on Amazon's debt added to the selloff. Lehman's Ravi Suria called the company's credit "weak and deteriorating." He wrote that the risk of Amazon's credit isn't priced into the company's two convertible bond issues outstanding and recommends that investors avoid the securities. Lehman hasn't performed recent underwriting for Amazon.

Herb Greenberg

, now seen on the

RealMoney.com

Web site, paints a grim picture for Amazon in a recent

piece. We'll pass along a key paragraph of his story for free, though you'll need to pay to see the rest of it. "Bottom line from all this: When all is said and done Amazon is just another fourth-quarter retailer that, despite having around $1 billion in cash and marketable securities on its balance sheet, still will need lots more cash to finance its planned expansion."

Amazon's woes seemed to drag down other traditional Internet names as fear continues to spread that revenue is not growing fast enough for Net stocks.

Yahoo!

(YHOO)

ended down 6 3/8, or 4.8%, at 125 5/16, while

eBay

(EBAY) - Get Report

finished off 4 5/16, or 7.4%, at 53 7/8 and

priceline.com

(PCLN)

dropped 3 1/2, or 7.7%, to 41 13/16.

America Online

(AOL)

ended the day down 3 1/8, or 5.5%, at 53 3/8.

Time-Warner

(TWX)

shareholders approved the company's merger with AOL, though it still needs government approval. AOL may have been hurt by a downgrade of entertainment stocks by

A.G. Edwards

on concerns over an economic slowdown. A.G. Edwards lowered both AOL and Time-Warner, along with

Disney

(DIS) - Get Report

and

Viacom

(VIA) - Get Report

, to maintain from accumulate.

Other casualties included a number of stocks that have rallied of late and were ripe for profit-takers.

Kana Communications

(KANA)

closed down 4, or 7%, at 53 1/2;

InfoSpace

(INSP) - Get Report

ended down 4, or 7%, at 52;

Phone.com

(PHCM)

dropped 5 3/8, or 6.7%, at 74 5/8;

About.com

(BOUT) - Get Report

tumbled 5 1/8, 15%, at 29 13/16;

Juniper Networks

(JNPR) - Get Report

slipped 6 1/8, or 4.8%, to 122 13/16; and

InterNap

(INAP) - Get Report

fell 5 5/16, or 12.7%, to 26 7/16.