SAN FRANCISCO -- Tech stocks endured a sharp selloff, with the Nasdaq surrendering 135 points in its second-worst point decline ever and several recent leaders taking 20% hits.

A pair of recent highfliers,

Ameritrade

(AMTD) - Get Report

and

E*Trade

(EGRP)

, were among the hardest hit, dropping 30% and 20%, respectively. Each online brokerage firm's stock had more than doubled this year ahead of the action.

Dawn Simon, software analyst with

Brown Brothers Harriman

, said there was some panic selling in a number of Internet stocks, but she still sees the losses as more of a correction from an overvalued position, which is not necessarily a bad thing.

"If it continues through the rest of the week and next week, then I think it's a selloff," Simon said. "But if it's just one day, it's a healthy correction."

Simon said it's going to take a couple of strong earnings reports or other positive news to right the market. There are some key companies slated to report earnings this week, including

Microsoft

(MSFT) - Get Report

on Tuesday. Simon also is looking ahead to next week when both AOL and

Amazon.com

(AMZN) - Get Report

will report earnings.

A solid earnings report has not helped Ameritrade, which Monday dropped 38 1/8, or 30%, to 87 7/8.

E*Trade

(EGRP)

closed down 18 3/4, or 20%, at 73 13/16.

Losses of 20% or more were not uncommon. Among some of the big names,

RealNetworks

(RNWK) - Get Report

closed down 41 7/8, or 25%, at 128 5/8. The largest point loser on the Nasdaq was

CMGI

(CMGI)

, down 46 7/8, or 18%, at 214.

Net.B@nk

(NTBK)

closed down 34 13/16, or 20%, at 139 7/8;

VeriSign

(VRSN) - Get Report

closed off 34 3/8, or 24%, at 110;

DoubleClick

(DCLK)

closed down 33 9/16, or 24%, at 104 1/2; and

CNet

(CNET) - Get Report

closed down 34, or 28%, at 79 5/16. One of the biggest percentage losers was

NetGravity

(NETG)

, which closed down 14 3/8, or 32%, at 30 3/8.

The day was expected to get off to a positive start following a reshuffling of management by

Compaq

(CPQ)

. But the reception to the changes was lukewarm, and Compaq, along with other boxmakers, fell with the rest of the sector as the day went on. Compaq finished down 7/8, or 4%, at 22 3/4.

Dell

(DELL) - Get Report

was not spared, closing down 2 13/16, or 7%, at 35 7/16, while

Gateway

(GTW)

was off 4 11/16, or 7%, at 59 1/2.

New Place to Bid on Bid.com

Bid.com

received approval Monday from the Nasdaq to trade in the U.S. The Toronto-based Internet auction house's shares will begin trading on the Nasdaq on Tuesday, under the ticker BIDS. The company's remaining shares will continue trading on the

Toronto Stock Exchange

.

"It gives them a heightened level of notoriety," said one hedge fund manager who used to be long

uBid

(UBID)

. "Many people who are online traders are novices, and they probably wouldn't know how to buy a Toronto stock."

The lack of a U.S. listing has not held the company's stock back from taking part in the robust gains that some Nasdaq-listed Internet companies have experienced. Bid.com's stock has climbed more than 500% in Toronto since Jan. 1.

The Nasdaq is the place to trade Internet stocks, the hedge fund manager said, "although today it's not a positive," he concluded.

--

Suzanne Galante