At first blush,

Agency.com

(ACOM)

, an Internet consulting company, looks like the cookie-cutter dot-com: it went public to great fanfare; its charismatic top executive was fawned over in a major business magazine's special issue of the 40 richest Americans under age 40, and its stock price soared, then tanked and remains in the doldrums.

But then a funny thing happened: the company began making money on its operations and has thus far survived the collective cold shoulder that Wall Street has given Internet companies this year without flooding the news wires with earnings warnings.

A steady flow of Internet consulting companies, which help businesses build Web sites, develop online advertising plans and create interactive business strategies, have either warned investors they will not meet earnings targets or missed estimates altogether in recent months, sending the industry's stock prices plummeting.

In the process, shares in companies like New York-based Agency.com -- which reported earnings Wednesday that topped analysts estimates for the second straight quarter -- are being pulled down by the tide of bad news.

Agency.com shares closed Thursday at $10.69, a bit more than a dollar off its all-time low of $9.63, but almost 90% of its high of $98, reached shortly after in went public in December 1999.

Guilt by Association

Weighing on Agency.com's stock price is not its financial results -- it has consistently met or topped analyst estimates -- but earnings disappointments by its competitors, analysts say.

"It goes by industry groups," Chan Suh, Agency.com's chief executive, said. "If

Intel

(INTC) - Get Report

preannounces, all the chips go down. I think we are getting caught up in that."

For example, Internet consultant

Razorfish

(RAZF)

fell over 11% on Oct. 19 after reporting its financial results. And Tuesday

MarchFirst

(MRCH)

came up

short of analysts' estimates by over 90%, reporting earnings of a penny a share while the

First Call/Thomson Financial

consensus estimate was 20 cents a share. A stampede of analysts followed up with downgrades.

Meanwhile, other companies besides Agency.com that have not disappointed analysts with their earnings, including

Scient

(SCNT)

, have seen their shares tumble.

Earlier this month, Scient, an Internet consulting company based in San Francisco, beat analysts estimates by a penny in the most recent quarter when it earned 7 cents a share, and its shares got a temporary boost before closing Thursday at $17.56, or 88% off its all-time high of $133.75, which it reached in March.

Of investors, James Dougherty, an analyst at

Prudential Securities

, said: "They have all tried to paint those earnings warnings with an industry brush. I'm not convinced that it is true." Dougherty has a strong buy on the company's stock and his firm has no underwriting relationship with Agency.com.

The market is trying sort out which companies in the sector are ripe for the long haul, he said. Agency.com "is doing a significantly better job than other companies in the group," he said.

Valuation Problem

The red flag, however, is that the market still does not know how to value companies like Agency.com, Dougherty said. While the company's shares are well below their all-time high, that may not mean much.

"Historical prices mean nothing," he said. "The market is still trying to find valuations for these companies."

And while in its most recent quarterly financial report, Agency.com company trotted out earnings of 7 cents a share, but that is only earnings on an operating cash flow basis. It doesn't make money in the conventional sense, that is when taking into account items like taxes and depreciation.

Nevertheless, Agency.com is in better shape than its rivals.

"I think this happens in every new industry," said Suh, a Korean-American, who dropped off

Fortune

magazine's list of the top 40 richest Americans under age 40 this year after his company's stock price shaved his personal wealth. "A substantial number of companies in our sector have said they will shrink, now grow."

And Agency.com is growing, having recently announced forays into Latin America and Korea.

In research reports, virtually all analysts who follow the company praise the company's business model, which from the beginning was focused on retaining Global 1000 companies as clients, rather than serving dot-coms.

"In a time when other major e-business architects have begun to plateau in terms of operating metrics (or worse yet, post disappointing results), Agency's business momentum and progress on key metrics are accelerating," according to a recent

Goldman Sachs

report. Goldman advises investors to buy Agency.com stock, and the firm was the lead underwriter for its initial public offering last year.

Effective Strategy

The prospects for Agency.com surviving the Internet shakeout are bright, analysts say, because so few of its clients are pure dot-com companies. Less than 6% of its revenues come from serving Internet clients, while most of its business comes from serving such blue-chip corporations as

British Airways

,

Compaq

,

Sprint

and

Unilever

.

Because Agency.com focused its efforts on large corporate clients from day one, it has a well-developed sales and marketing team, say analysts. This contrasts with other online consulting firms that geared their business models towards serving early-stage, venture capital-backed Internet clients. For a time, that was sufficient.

"They were basically in the mode for the last year of just answering the phone," said Dirk Godsey, an analyst

Chase H&Q

. But the phone stopped ringing, leaving many Internet consultants with a declining client base, he said.

For sure, the business Agency.com is in -- the Internet professional services market -- is set to grow tenfold over the next few years, from to $78 billion in 2003 from $7.8 billion in 1998, according to industry estimates.

In addition, Godsey said, Agency.com is a step ahead of rivals in offering services for broadband, wireless and interactive television. Godsey has a strong buy recommendation on the stock, and his firm was a co-manager of Agency.com's initial public offering.

"They have a broader view of the market than the executives of other companies," he said.

While Agency.com appears to be in a good position to emerge as a star out of the Internet haze, Godsey did caution investors that the sector is likely to continue to be weighed down by a general negative sentiment towards investing in Internet companies.

"I think when the sector starts to move again, investors will want to own Agency.com," Godsey said.