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Yes, business-to-business plays have stolen some of the thunder from more traditional Internet names lately, but Yahoo! (YHOO) can still command the sector's attention on the day it reports its quarterly results. That fact was evident today.

Yahoo!, which finished down 38 11/16, or 9%, at 397 3/8, reported earnings of 19 cents a share after the close today, better than the 15 cents analysts had expected but roughly in line with the 18- to 20-cent whisper number being circulated. Particulars in the report also were as good or better than expected, but some disappointment could stem from the company announcing a 2-for-1 stock split rather than something bigger. Trading in Yahoo! was halted pending the release of the report.

Yahoo!'s pre-earnings selloff came on a couple of factors that revolved around a "buy the rumor, sell the fact" scenario. The bar is set so high on Yahoo! that even ultra-strong numbers have already been factored into the stock. To add to that, many investors expected the company would announce a 3-for-1, or even a 4-for-1, split, a "letdown" that could make for more rough times tomorrow.

In after-hours trading, Yahoo! actually moved slightly higher after trading curbs were lifted. However, it soon dropped roughly 27 points from where it closed the regular trading day, according to the


trading system. Internet Sector

index closed down 66.48, or 5.7%, at 1094.69, giving back most of yesterday's 76-point gain. While Yahoo! was a catalyst for much of the selling in the Internet sector today, it was not the only one.

America Online


certainly was a factor on the day after the company said it was merging with

Time Warner


. Investors fixated on a downgrade of the stock by

Schroder & Co.

to "outperform" from "outperform significantly." Analysts indicated they were concerned that the deal could slow AOL's growth. AOL ended down 8 1/8, or 11%, at 64 1/2.

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also suffered from a downgrade related to yesterday's AOL-Time Warner deal.

Deutsche Banc Alex. Brown

downgraded Excite@Home to market perform from buy, citing concerns that the company could lose its exclusive relationships with its cable partners. The stock closed down 2 7/8, or 7%, at 37 1/4.

Other significant decliners included Internet incubators




Internet Capital Group


, which typically suffer when the broader sector drops. CMGI saw profit-taking ahead of its post-close split today, ending off 24 5/8, or 8%, at 281 7/8, though that was less than the 31-point gain the stock had yesterday. Internet Capital continued to see fallout from a negative piece about it in


over the weekend, finishing down 22 11/16, or 14%, at 143 1/16.

Benefiting from news that it would split was

Kana Communications


, which closed up 19, or 10%, at 216 after its board approved a 2-for-1 split. However, Kana did catch a bit of the selling seen elsewhere in the sector, as it backed off its 243 1/2 intraday high.