Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

The Internet industry as a whole closed the day down 0.5% versus the S&P 500, which was up 0.2%. Laggards within the Internet industry included

Net Element

(

NETE

), down 4.1%,

Selectica

(

SLTC

), down 4.7%,

ChinaNet Online Holdings

(

CNET

), down 3.2%,

Internet Initiative Japan

(

IIJI

), down 2.7% and

Geeknet

(

GKNT

), down 2.2%.

TheStreet Ratings Group would like to highlight 3 stocks that pushed the industry lower today:

Internet Initiative Japan

(

IIJI

) is one of the companies that pushed the Internet industry lower today. Internet Initiative Japan was down $0.33 (2.7%) to $11.83 on average volume. Throughout the day, 5,538 shares of Internet Initiative Japan exchanged hands as compared to its average daily volume of 6,300 shares. The stock ranged in price between $11.78-$11.94 after having opened the day at $11.94 as compared to the previous trading day's close of $12.16.

Internet Initiative Japan Inc., together with its subsidiaries, offers Internet connectivity, WAN, outsourcing, and systems integration services primarily in Japan. The company operates in two segments: Network Services and Systems Integration Business, and ATM Operation Business. Internet Initiative Japan has a market cap of $1.1 billion and is part of the technology sector. Shares are down 11.0% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Internet Initiative Japan

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from TheStreet Ratings analysis on IIJI go as follows:

  • The revenue growth came in higher than the industry average of 21.3%. Since the same quarter one year prior, revenues rose by 33.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.28 is sturdy.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 38.33%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 32.00% compared to the year-earlier quarter. Looking ahead, the stock's sharp decline over the past year may have been what was needed in order to bring its value into alignment with its fundamentals and others in its industry.
  • INTERNET INITIATIVE JAPAN INC's earnings per share declined by 32.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, INTERNET INITIATIVE JAPAN INC reported lower earnings of $0.49 versus $0.69 in the prior year.

TheStreet Recommends

You can view the full analysis from the report here:

Internet Initiative Japan Ratings Report

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At the close,

ChinaNet Online Holdings

(

CNET

) was down $0.03 (3.2%) to $0.81 on light volume. Throughout the day, 1,000 shares of ChinaNet Online Holdings exchanged hands as compared to its average daily volume of 68,700 shares. The stock ranged in price between $0.81-$0.81 after having opened the day at $0.81 as compared to the previous trading day's close of $0.84.

ChinaNet Online Holdings, Inc., through its subsidiaries, provides business-to-businesses Internet services for small and medium enterprises (SMEs) sales networks in the People's Republic of China. ChinaNet Online Holdings has a market cap of $18.3 million and is part of the technology sector. Shares are down 2.4% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

ChinaNet Online Holdings

as a

hold

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, largely solid financial position with reasonable debt levels by most measures and attractive valuation levels. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from TheStreet Ratings analysis on CNET go as follows:

  • Compared to its closing price of one year ago, CNET's share price has jumped by 30.15%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • CNET's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CNET has a quick ratio of 1.75, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The revenue fell significantly faster than the industry average of 14.8%. Since the same quarter one year prior, revenues fell by 27.3%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Media industry and the overall market, CHINANET ONLINE HOLDINGS's return on equity is below that of both the industry average and the S&P 500.
  • CHINANET ONLINE HOLDINGS reported flat earnings per share in the most recent quarter. The company has reported a trend of declining earnings per share over the past two years. During the past fiscal year, CHINANET ONLINE HOLDINGS reported lower earnings of $0.13 versus $0.15 in the prior year.

You can view the full analysis from the report here:

ChinaNet Online Holdings Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Selectica

(

SLTC

) was another company that pushed the Internet industry lower today. Selectica was down $0.30 (4.7%) to $6.07 on light volume. Throughout the day, 100 shares of Selectica exchanged hands as compared to its average daily volume of 6,400 shares. The stock ranged in price between $6.07-$6.07 after having opened the day at $6.07 as compared to the previous trading day's close of $6.37.

Selectica, Inc. provides cloud-based software solutions for companies in the United States, Canada, India, New Zealand, Switzerland, and the United Kingdom. Selectica has a market cap of $29.2 million and is part of the technology sector. Shares are down 0.6% year-to-date as of the close of trading on Thursday. Currently there is 1 analyst who rates Selectica a buy, no analysts rate it a sell, and none rate it a hold.

TheStreet Ratings rates

Selectica

as a

sell

. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, poor profit margins, weak operating cash flow, generally high debt management risk and generally disappointing historical performance in the stock itself.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Highlights from TheStreet Ratings analysis on SLTC go as follows:

  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Internet Software & Services industry. The net income has significantly decreased by 51.4% when compared to the same quarter one year ago, falling from -$2.09 million to -$3.17 million.
  • The gross profit margin for SELECTICA INC is currently lower than what is desirable, coming in at 34.43%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -89.46% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$1.68 million or 168.83% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • The debt-to-equity ratio of 1.03 is relatively high when compared with the industry average, suggesting a need for better debt level management. Even though the debt-to-equity ratio is weak, SLTC's quick ratio is somewhat strong at 1.38, demonstrating the ability to handle short-term liquidity needs.
  • SLTC's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 28.79%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.

You can view the full analysis from the report here:

Selectica Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.