Warning shots rang out across the bow of the good ship Internet today -- with the potential to develop into something pretty serious.

TheStreet.com Internet Sector

index was down 75.66, or 7.2%, to 976.91 in recent trading.

TheStreet.com New Tech 30 was down 26.85, or 4%, to 649.42. Our own

James Cramer

was recognizing problems the Net sector was having. In a recent

piece, he wrote that he was trimming his exposure to

Nasdaq

stocks. The Nasdaq Composite was lately down 183.02, or 4.1%, to 4263.43.

Playing It Safe

Safeguard Scientifics

(SFE) - Get Report

said today that it was narrowing its focus to Internet infrastructure companies and shifting away from developing business-to-business Internet commerce companies.

TheStreet.com/NYTimes.com

joint newsroom took a closer look at the announcement in a recent

piece.

Several B2B companies were among the hardest-hit stocks in today's selloff. Among the leading decliners,

Vignette

(VIGN)

was down 25 13/16, or 12.9%, to 175 1/8;

i2 Technologies

(ITWO)

was off 25 15/16, or 18.9%, to 111;

724 Solutions

(SVNX)

was down 21, or 17.4%, to 100; and

E.piphany

(EPNY)

was off 13 7/8, or 11.8%, to 103 1/2.

In addition,

Merrill Lynch

chief market analyst

Richard McCabe

indicated that the technology sector had begun a corrective trend and suggested investors reduce exposure to some of the stocks in the sector.

Not garnering as much attention were words of caution from influential Merrill analyst

Henry Blodget

. He noted how trends in the U.S. could have an impact on Asian companies, and also touched on some disturbing trends in the U.S.

"Despite growing concerns about profitability in the equity markets, it appears that the free model of 'viral marketing' remains attractive," wrote Blodget and Matei Mihalca. "Not just free PCs, but free music, free books, free just about everything. The Internet seems to be a land-grab, goes such thinking, so you gotta go free. If true, this raises questions about pricing models in the U.S. as well as in Asia."

Blodget also dealt with the recent turmoil in business-to-business stocks, noting that it is still a "nascent market, where the industry and investment communities are only now beginning to learn what works and what doesn't. We continue to be convinced that B2B is an enormous opportunity; however it looks as if it may not be independent third-party marketplaces that will capture a majority of the value in oligopolistic industries. Instead, industry-led initiatives may have a better shot in markets with concentrated supply and demand."