You can't stop technology, and you apparently can't stop the
Nasdaq Composite Index
from testing its recent low.
Tech stocks were seeing follow-through selling after a couple of lousy days.
did its best, but was unable to lift the sector with its earnings report. Add a downgrade of
Salomon Smith Barney
and a drop in
, which said today that it had shipped defective motherboards that caused memory problems, and tech stocks were reeling from the outset.
The Nasdaq was down 181.04, or 5.05%, at 3403.97 in recent trading. It was nearing the low of 3345 from April 24 and within spitting distance of the 3227 low from April 17.
TheStreet.com Internet Sector
index was down 40.86, or 4.8%, at 810.02 and was still a ways away from the 669.60 low from April 17. Our own
placed some of the weakness in the Net sector on insider selling in an earlier
There was little out there to suggest relief was on the way. Investors may be waiting for the
meeting next Tuesday to pass before they put some money to work, though the market must also contend with the
Consumer Price Index
report on the same day. Technical indicators also suggest a test of the lows and the Nasdaq was holding below its 200-day moving average today at 3578.06.
Among the stocks reeling today were
, down 22, or 12%, at 155;
, down 6 7/16, or 14%, at 40 3/8;
, down 10 3/8, or 9%, at 110 13/16; and
down 8 11/16, or 16%, at 45 1/8. Yesterday, InfoSpace chairman Naveen Jain filed to sell $107.7 million in stock, according to
Among business-to-business plays,
was down 5 1/2, or 9%, at 56 1/2;
was down 12 1/2, or 12%, at 91 5/8;
was down 2 11/16, or 10%, at 24 9/16; and
was down 5 1/8, or 11.6%, at 38 15/16.
HomeGrocer.com Not Bagging It
Mary Alice Taylor, CEO of newly public
, laid out her company's plan today to dominate the online grocery market, but at the same time said that rollout plans for the fourth quarter were put on hold in favor of pursuing profitability. Speaking at the
Chase H&Q Technology Conference, Taylor said that Homegrocer is looking to capture a large part of the 20% to 30% of the $450 billion grocery business that they think will migrate online.
Currently, the company has six order fulfillment facilities, all on the West Coast. But, by the end of June they'll have opened three more and by the end of the year they expect to be nationwide. In the first quarter, HomeGrocer was the largest company in its industry, ahead of competitors
Peapod was struggling earlier this year after CEO Bill Malloy resigned suddenly, and the company subsequently lost $120 million in financing. Relief came in the form of a $73 million investment from
of the Netherlands.
HomeGrocer may be suffering from the same malaise. Taylor announced at the conference that rollout plans for the fourth quarter were put on hold in favor of pursuing profitability. Losses for the first quarter were wider than expected at 31 cents a share, excluding a stock-based compensation expense, compared to Street estimates of 28 cents.
Though HomeGrocer had $257 million in cash at the end of the quarter, net loss was $43.5 million. That cash burn rate gives them roughly five quarters to become cash flow positive. Add to that the recent five-year, $60 million marketing deal with AOL, and the decision to hold off on expansion in the fourth quarter appears to be necessary medicine.
Company executives made much of HomeGrocer being a "physical portal" into the home. Though Taylor reassured the audience that groceries were the company's core business, the video portion of the presentation featured Jeff Bezos hyping the physical portal concept and speculating that it could lead to the delivery of other items, such as film and dry cleaning.
is HomeGrocer's largest shareholder, with a 22% equity stake.
One of HomeGrocer's co-founders summed up the online grocery business for the audience: "Consumers appreciate that this is a better shopping experience, they just aren't willing to pay for it." If that's the case, then why should investors pay for it?
In recent trading, HomeGrocer.com was down 1/16, or 1.2%, at 5.
Edie Yates contributed to this report.