Few Nets See Green After Fed Chief's Testimony

Plus, eBay experiences more technical difficulties.
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SAN FRANCISCO -- Federal Reserve Chairman Alan Greenspan has done little to relieve anxiety in the stock market, so Internet stocks have accordingly extended the losses they made earlier today.

In his

Humphrey-Hawkins

testimony before Congress, Greenspan said the economy may be growing too fast and it could lead to another hike in interest rates should there be signs of inflation. His comments have sent Treasury prices

tumbling, and the stock market has followed suit.

In addition to Greenspan spooking the market, much of the blame for weakness in the Net sector was being placed on

Amazon.com

(AMZN) - Get Report

following its quarterly report on Wednesday. Amazon was recently trading down 15 15/16, or 13%, at 109 1/2, near its session low of 106 9/16.

There was some disappointment in the market that Amazon only met analyst estimates with its 51-cent second-quarter loss and did not come close the whisper number, which looked for a loss of 40 cents, according to

EarningsWhispers.com

.

Investors also continue to scrutinize Amazon's strategy of growing its business at the expense of its profitability.

Bear Stearns

downgraded the stock to attractive from buy, in part because the company plans to spend $300 million on improving its warehouse capacity over the next two years.

But

Merrill Lynch

analyst Henry Blodget has maintained his near-term accumulate and his long-term buy ratings on the stock. In a research note released earlier today, Blodget wrote that "the results were solid enough for a seasonally slow quarter." Blodget also said that "fantasies aside, we weren't actually looking for much upside. In the belief that e-holiday euphoria will provide catalysts aplenty in

the fourth quarter, we are maintaining our ... rating."

Morgan Stanley Dean Witter's

Mary Meeker has also seen the light at the end of the tunnel. Earlier today, Meeker boldly proclaimed "Christmas should be great" in a report on the company's second-quarter results.

"We ask: What are big spending, big customer levels and big losses about if not to generate high revenue growth with plans for high levels of future profitability?" Meeker asked. "Again, it seems like the

America Online

(AOL)

network build of the mid-1990s all over again."

Losses in America Online, which also reported earnings Wednesday, were not soothing the sector either. AOL was off 3 13/16, or 3%, at 111 1/4. Though AOL bested the fiscal fourth-quarter consensus by 2 cents with the 13-cent profit it reported last night, there was some disappointment with the increase in its subscriber base of 755,000, which was below estimates of between 775,000 and 800,000 new subscribers.

Shares of

Network Solutions

(NSOL)

were down despite the company's strong quarterly numbers reported before the open today. The stock dipped 4, or 5%, at 73 1/4 in recent trading.

One of the few Internet companies to actually post a profit, Network Solutions had earnings per share of 17 cents for its second quarter, a penny better than the

First Call

estimate of 16 cents and more than double the year-ago 7 cents. Revenue of $47.5 million was up 132% from $20.5 million in the second quarter last year. Most impressive, though, was that the company had net new registrations of 1.2 million in the quarter, up 28% from the first quarter total of 922,000.

More Problems at eBay

More technical problems plagued eBay's site earlier this afternoon. An alert reader notified

TSC

that the system was down and that a message on eBay's site said the system would be unavailable beginning at 1:30 p.m. EDT "for approximately 45 minutes in order for

the engineering staff to perform emergency maintenance." Today's troubles are the latest in what has been a series of technical problems for the site. In recent trading, eBay was down 3 13/16, or 3%, at 111 1/2.