Net Investors Shrug Off Correction Concerns

Monday's tech plunge wasn't the start of the sector's decline. Instead, it's been a buying opportunity.
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SAN FRANCISCO -- Seems like there's no stopping Internet stocks. A couple of days ago when Net stocks nosedived, there were concerns about valuations and talk of a big potential correction in the sector. Instead, this setback, like others before, became a buying opportunity, and Net stocks have roared back the past two sessions.

Derek Brown, analyst with

Volpe Brown Whelan

, said it's important for investors to look at the companies' fundamentals and to view losses from broader market conditions as opportunities to get in.

"What I've been focused on for some time is the fundamentals of a company on a company-by-company basis: which companies are acquiring customers cost-effectively, which are growing in the market share they're in, which companies are likely to exceed expectations," he said.

Among the stocks he mentioned are a number of Net bellwethers, including

America Online

(AOL)

,

E*Trade

(EGRP)

,

eBay

(EBAY) - Get Report

,

Yahoo!

(YHOO)

,

Amazon.com

(AMZN) - Get Report

and

CNet

(CNET) - Get Report

. Of those, Volpe Brown Whelan has done underwriting only for CNet.

Brown said valuations of the Net stocks are a concern, but the future of the industry is promising.

"It does bother me, but valuation in this industry has been a concern for the 2 1/2 years I've been involved in it," he said. "In that time, they've gone from high to extremely high, but I think there's a bigger phenomenon, and that's a fundamental shift in consumer behavior that needs to be recognized."

Among the top Internet performers today is

CMGI

(CMGI)

, the company that invests in fledgling Internet companies. It was up 33, or 16%, at 239.

Lycos

(LCOS)

is also among the top point-gainers, up 16, or 22%, at 89 7/8. According to

Media Metrix

, the Lycos Network attracted more visitors to its sites in March than did Yahoo! Lycos had a 51.8% audience reach and 31.9 million unique visitors in March vs. Yahoo!'s 50.8% audience reach and 31.3 million unique visitors.

Also back in the news is

K-Tel

(KTEL)

. The company said it added an online auction section to its

ktel.com

Web site. Besides featuring music, the site includes collectibles, computers, sporting goods, toys and software. It was trading up 1 3/16, or 15%, at 9 7/16.

Online brokerages continued to surge today, though

Schwab's

(SCH)

online trading site has been having problems again. Customers were delayed from accessing certain areas of the site. The stock was up 10 1/8, or 9.5%, at 116 7/8.

E*Trade

(EGRP)

, which got brokerage stocks back on track with a stellar earnings report Tuesday, was up 11 3/16, or 12.5%, at 101.

Ameritrade

(AMTD) - Get Report

was up 16 3/8, or 15%, at 127 1/2.

Good News for Semiconductor Equipment Stocks

Semiconductor equipment stocks are getting a boost from a couple of positive reports.

Semiconductor Equipment and Materials International

reported that orders for chipmaking tools rose to $1.15 billion in March, which was a 14% increase over February. Also, the book-to-bill ratio for the industry was at 1.30 vs. 1.21 in February.

After the book-to-bill ratio's release,

Donaldson Lufkin & Jenrette

upped its rating on the industry to buy from market perform and raised ratings on

Teradyne

(TER) - Get Report

and

Credence Systems

(CMOS)

to buy from market perform. Teradyne was up 4 15/16, or 9%, at 58 7/16, while Credence Systems was up 4 1/4, or 17%, at 29 3/8.

Also,

Novellus Systems

(NVLS)

was up 9 3/16, or 19%, at 57 1/16.

KLA-Tencor

(KLAC) - Get Report

was up 6, or 12%, at 56 and

Lam Research

(LRCX) - Get Report

was up 3 5/16, or 12%, at 31 3/8.

Also on the rise were

ASM Lithography

(ASML) - Get Report

, up 4 1/4, or 10%, at 46 5/8;

Cymer

(CYMI)

, up 1 3/4, or 11%, at 18 1/4;

Dupont Photomasks

(DPMI)

, up 5 1/2, or 13%, at 48 1/2; and

Etec Systems

(ETEC)

, up 3, or 12%, at 27 1/2.