Net Sector Wilts Into the Weekend

Yahoo!'s weakness and E*Trade's site outage rattled Internet investors.
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SAN FRANCISCO -- Continued weakness in Yahoo! (YHOO) and another high-profile outage left the Internet sector limping into the weekend.

TheStreet.com Internet Sector

index ended the day down 0.12 at 664.84, nearly identical to the 664.31 level where it began the week.

Contributing to the sluggishness in the sector was ongoing weakness in Yahoo! Though Yahoo! was up for much of the day Thursday after a strong earnings report on Wednesday, it ended Thursday's session lower and extended those losses today. Yahoo! closed down 4 7/16, or 3%, at 160.

Youssef Squali, Internet analyst with

Ladenburg Thalmann

, said that a lot of nervousness remains in the market, particularly with the highly volatile Net stocks. He said there is a propensity for investors to run up the stocks in anticipation of good earnings results, "then there's profit-taking and everyone runs for the exit."

Not helping was another high-profile outage. Online broker

E*Trade's

(EGRP)

site was down much of the day. E*Trade closed down 1 7/16, or 3.5%, at 39 3/4.

Also among online brokers,

National Discount Brokerage

(NDB)

closed down 4 13/16, or 8%, at 54 3/16 following release of its earnings Thursday. NDB reported fiscal fourth-quarter earnings of 47 cents a share, which were below the 49-cent

First Call

estimate.

The focus will remain on earnings next week.

Ameritrade

(AMTD) - Get Report

reports before the open on Monday. It is expected to report earnings of 3 cents a share. Ahead of the announcement, Ameritrade closed down 2 5/8, or 6%, at 38 1/8.

Among other companies scheduled to report are

Inktomi

(INKT)

and

Earthlink Network

(ELNK)

on Wednesday and

CNet

(CNET) - Get Report

on Thursday.

One bright spot in today's session was another successful introduction.

Liquid Audio

(LQID:Nasdaq), which provides software that enables the digital delivery of music over the Internet, had a stellar debut. It closed up 21 9/16, or 144%, at 36 9/16.

Two stocks that flourished in Thursday's trade due to takeover speculation gave back a portion of those gains today. Internet service provider

MindSpring

(MSPG)

, which got the market into a lather on Thursday when it canceled an analysts' meeting, fueling speculation of an impending buyout, closed down 2 3/16, or 4%, at 51 1/8.

Bloomberg

reported MindSpring has not made any definitive agreements and the company is being "intentionally vague" about the talks because they have multiple opportunities.

Also, Earthlink Network, another ISP, closed down 2 3/4, or 4%, at 67 3/4. The company is rumored to be in

talks with

Gateway

(GTW)

regarding an acquisition.

Paul Allen's Midas Touch

Shares of

Asymetrix Learning Systems

(ASYM)

nearly tripled this afternon before easing some, as word spread that

Microsoft

(MSFT) - Get Report

co-founder Paul Allen owns 5.9 million shares, or 42%, of the Bellevue, Wash.-based developer of educational software. The news stemmed following an

SEC

filing by Asymetrix today that was picked up on bulletin boards.

Asymetrix closed up 4 3/16, or 105%, at 8 3/16 after trading as high as 11 5/8.

But Allen's involvement in Asymetrix is hardly news. An SEC filing on April 23 revealed the Allen investment as well. In fact, Allen helped launch the company as a research firm in 1984. In the last few years Asymetric has branched into online educational products and acquired several firms.

Evidently Microsoft was a more fruitful venture for Allen, a noted executive and investor: Asymetrix went public at 11 one year ago, and even after today's explosion it remains a broken IPO.

Asymetrix was a source of profits and humor on the

Yahoo! Finance

bulletin boards. "Quick buck," wrote "tctvfave" at 2:53 p.m. EDT. "Bought at 10 sold at 11 nice quick buck" (sic).

"People are so desperate (i.e. greedy) to make money that they don't even read. This isn't new news. The stock will go right back down. Ha ha," said LEGENDH at 2:51 p.m.

But not just the longs are playing this non-news. One trader shorted the stock when it hit 7 today and is waiting to profit if it retreats. Speaking at 3:00 p.m., he said "I'm getting hurt."

An official at Asymetrix was not immediately available for comment.

-- Kevin Petrie

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