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Gain in Web Usage Fails to Boost Net Stocks

May's Media Metrix numbers show a rise in Web use but declines at some leading sites.

SAN FRANCISCO -- May's widely anticipated Internet usage numbers failed to boost Net stocks, which have fallen victim to profit-taking after yesterday's solid advance.

Media Metrix

Tuesday released data showing Internet usage rose 1.3% in May from April levels, reversing April's decline but falling short of the level required to spark a rally.

Unique visitors on the Internet in May rose to 61.9 million users from 61.1 million users in April and 61.6 million users in March. Internet stocks had faltered after last month's report indicated a month-to-month

decline in Internet usage.

The top three sites in terms of reach,

America Online

(AOL)

,

Yahoo!

(YHOO)

and

Microsoft

(MSFT) - Get Microsoft Corporation (MSFT) Report

, all showed declines on the month, according to Media Metrix data obtained by

Deutsche Banc Alex. Brown

. Reach for AOL sites declined to 65.2% from 65.9%; Yahoo! fell to 63.8% from 64.2%; and Microsoft sites declined to 52.3% from 53%.

Lycos

(LCOS)

, which was fourth in reach, showed an increase to 48.4% from 47.3%.

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Net stocks didn't react much to the numbers early on, as investors were still digesting the report. AOL was up 5/8 at 116; Yahoo! was up 1 1/8, or 1%, at 160; Microsoft was down 1, or 1%, at 87 15/16; and Lycos was down 1, or 1%, at 95 5/8.

In a research note, Deutsche Banc Alex. Brown analysts wrote that despite the slight uptick in Web traffic, several sites felt "the effects of summer seasonality." The analysts said the top-tier Internet media networks did not show month-over-month growth because "a growing proportion of the Web audience are visiting a fewer number of top-tier IMNs within a given month, and the Web audience could be fragmenting among smaller yet rapidly emerging sites on the Web."

Among e-commerce sites,

Amazon.com

(AMZN) - Get Amazon.com, Inc. Report

showed an increase in reach to 17.5% in May from 17.1% in April.

eBay's

(EBAY) - Get eBay Inc. Report

reach expanded to 13.3% from 11.8%. Amazon was up 2 1/2, or 2%, at 126, while eBay was up 4 15/16, or 3%, at 157. eBay's gains also likely reflected news that it purchased

Alando.de

, a privately held German auction site.

Deutsche Banc analysts wrote that based on conversations with management, they expect "most of the Internet media networks and commerce players will report June quarter results in line to slightly above expectations." They said they expected trading in the Internet sector to remain choppy in the near term, with the release of second-quarter results in the next four to six weeks as the next major catalyst. Deutsche Banc Alex. Brown has done underwriting for AOL, Lycos and Infoseek.

In the News

3Com

(COMS)

, which is set to report earnings after the close Tuesday, was in the news this morning after America Online said it would provide users with email access on 3Com's Palm products. 3Com is expected to report fiscal fourth-quarter earnings of 23 cents a share, according to

First Call

. It was up 1/16 at 31 in early trading.

In the IPO market,

Salon

(SALN:Nasdaq), an online magazine, will begin trading today. It was priced at 10 1/2 Monday.