Net Stocks Wobble but They Don't Fall Down

The Internet sector got off to a fairly good start, but the broader market seems to be weighing it down.
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Internet stocks were still looking to get their legs as the week began. Despite an early push higher, Net stocks were still wobbly, taking their cues from the broader market. TheStreet.com Internet Sector index was up 4.31, or 0.8%, at 532.72 this morning.

Price action in

America Online

(AOL)

was typical for the sector. AOL traded as high as 97 5/8 on the opening thanks to some positive comments from

Hambrecht & Quist

, but was recently down 1, or 1.0%, at 95 7/8.

H&Q analyst Paul Noglows wrote today that America Online officials met with analysts Friday to unveil version 5.0 of its online service, while also addressing the issues of broadband and free access. Noglows wrote that AOL "remains the company best positioned to exploit the growth of the Internet and online services" and believes the stock's current price "significantly underestimates the value of that opportunity." H&Q does not do underwriting for AOL.

AOL also said today that it would partner with

EMusic.com

(EMUS)

to offer downloadable music on AOL's

ICQ

,

Spinner

and

Winamp

services. EMusic.com was one of the early top percentage gainers on the

Nasdaq

, up 3 13/16, or 25%, at 18 15/16.

Hambrecht & Quist and

Credit Suisse First Boston

also initiated coverage of

MP3.com

(MPPP)

today, both with buy ratings. Both firms were underwriters for MP3.com's IPO in July. It was up 1 9/16, or 4%, at 37 13/16.

Credit Suisse First Boston analyst Lise Buyer also took aim at the recent selloff in Net stocks, saying she could find "no orderly pattern between valuation, either on a revenue-multiple basis or a market-cap-per-subscriber basis and the underlying fundamentals of subscriber revenue and/or profitability."

Buyer wrote that she expected the bigger companies like

Amazon.com

(AMZN) - Get Report

, AOL,

eBay

(EBAY) - Get Report

,

Intuit

(INTU) - Get Report

and

Yahoo!

(YHOO)

"to recover at a faster rate than some of the smaller companies."

In early trading, Amazon was down 1 9/16, or 4%, at 37 13/16; eBay was down 1, or 1%, at 97; Intuit was down 9/16, or 0.7%, at 80 3/4; and Yahoo! was down 1 7/16, or 1%, at 137 3/8.