SAN FRANCISCO -- The beleaguered Internet sector got a reprieve today, but not all was well on the IPO front. Two of five Internet IPOs closed lower, with one basically unchanged, an unprecedented mark of futility in the market.
Juno Online Services
(JWEB:Nasdaq), a low-cost Internet service provider with free email, closed down 1 3/8, or 10.6%, at 11 5/8. Also,
(ZIPL:Nasdaq), a wholesale Web service provider, closed down 1 5/8, or 11.6%, at 123 3/8. And
(EDGR:Nasdaq), an online supplier of SEC filings, was slightly lower much of the day before ending up 1/16 at 9 9/16.
What happened? There are a few basic factors at work. One, there have been a flood of IPOs in recent weeks -- witness the five from today. Two, investors are becoming more discriminating, not just rushing out and buying anything dot-com. Third, in case you hadn't noticed, the Internet sector has been in a steep correction over the past few weeks, particularly the last couple of days, so that investors have become a little more cautious.
Randall Roth, analyst with the
Renaissance Capital IPO Fund
, attempted to address the question of whether the Internet IPO market is dead.
"Right now, the jury is out. It's still deliberating," he said. "
The Internet IPO market's probably not dead but comatose."
Other Net IPOs posted gains, but the percentages were not in the triple digits as was once customary of an Internet IPO.
(DIR:NYSE), the online brokerage unit of
Donaldson Lufkin & Jenrette
, closed up 10, or 50%, at 30. And
(STRM:Nasdaq), a portal geared toward Latin-Americans, had the best percentage gain of the IPOs, closing up 11 1/16, or 74%, at 26 1/16.
Internet stocks righted themselves, but got a little help from
, which acted like an Internet stock while leading the
to a 171-point gain. Big Blue splits as of the close today, and in advance of that split, it closed up 15 1/16, or 7%, at 236 1/4. IBM also agreed to license
streaming technology to deliver courses over the Web. 7thStreet.com closed up 7/8, or 16%, at 6 11/32.
But focus today was on Net stocks and whether they could bounce back from the sharp downturn. And it certainly had the makings of an ugly day following news that
Morgan Stanley Dean Witter
Internet guru Mary Meeker had warned Morgan's sales force that there could be further weakness ahead for Net stocks and that there could be another 20% correction in the sector. She reportedly mentioned that
TheStreet.com Internet Sector
index could fall to 450, which is about 20% below where it began trading today. The index finished the day up 21.7 points, or 4%, at 572.
But even though Meeker is one of the more influential analysts, the sector has been more of a momentum play than one focusing on what analysts are saying.
After a choppy morning, the momentum shifted and traders began to go long or cover shorts. Net bellwethers led the way.
closed up 13 15/16, or 11%, at 140 7/8, after reaching a session low of 120 1/2.
closed up 10 3/8, or 6%, at 174 5/16 after reaching a low of 151 7/16. Also,
closed up 12 3/16, or 21%, at 70 3/16 after reaching a low of 55 5/8.