NEW YORK (CNNfn) - Technology stocks took a dive Monday, with Internet issues heading sharply lower on the heels of a published report, which said a number of dot.coms are likely to run out of cash within 12 months.
Dot.coms also were pulled down by news that e-commerce software company MicroStrategy (MSTR: Research, Estimates) said it will restate operating results for the past two years and report a 1999 loss instead of a profit.
The company said it was restating its earnings to comply with new guidelines recently issued by the Securities and Exchange Commission on how companies can account for their revenues.
MicroStrategy shares ended Monday's session down 140 at 86-3/4, a 61.7 percent decline on the day.
"I think the stock had been very extended in terms of valuation, in any event, so I think it was very vulnerable to something like this," Josephthal & Co. analyst Bert Hochfeld told CNNfn.com. "I think that the valuation of the shares at several hundred times revenues was so extreme that it didn't take much."
Some of MicroStrategy's competitors also dropped sharply Monday. E.piphany (EPNY: Research, Estimates) shares fell 30-1/2, or 15.2 percent, to 170. Kana Communications (KANA: Research, Estimates) ended the session down 28-1/2 at 103, a 21.6 percent slide. And Vignette (VIGN: Research, Estimates) shares closed down 36-5/16, or 15.4 percent lower, at 199-15/16.
Meanwhile, a report published by Barron's cast a dark shadow over several dot.coms, including: online music vendor CDNow (CDNW: Research, Estimates); network security company Secure Computing (SCUR: Research, Estimates); online health Web sites drkoop.com (KOOP: Research, Estimates) and Medscape (MSCP: Research, Estimates); and online grocer Peapod (PPOD: Research, Estimates).
The article cites an exclusive survey of 207 Internet companies done for Barron's by Pegasus Research, which found that "51 of them are likely to run out of funds soon."
Several Wall Street analysts rushed to the defense of some of the companies named in the Barron's report, and CDNow issued a statement refuting its findings. Even so, most of them ended the session sharply lower.
CDNow shares were down 1-1/8, or 16.7 percent, at 5-5/8. Secure Computing fell 3-1/8 to 19-3/4, a 13.7 percent decline on the day. Drkoop.com shares fell 1-5/16, or 15.7 percent, to 7-1/16. Medscape ended the session down 1-1/4 at 5-15/16, a 17.4 percent slide. Peapod shares, which had already been under pressure and last week lost its chief executive, ended Monday's session down 7/16, at 3-1/18, a 12.3 percent slide.
And the negative tone was enough to spark selling across the board, some market participants said.
"Barron's came out with an article about the burn-rate in cash for some of these dot.coms, and that's whacked a whole bunch of them," said Paul Cox, manager of the Commerce Mid-Cap Fund at Commerce Bank.
 The Dow Jones composite Internet index ended the session 33.19 lower at 433.35, a 7.1 percent slide on the day.
Other losers Monday included online auctioneer eBay (EBAY: Research, Estimates), which slid 22-13/16, or 10.4 percent, to 196-1/8. Infospace.com (INSP: Research, Estimates) fell 36-1/2 to 173, a 17.4 percent decline on the day. Business-to-business e-commerce company OpenMarket (OMKT: Research, Estimates) fell 8-7/16, or 19.6 percent, to 34-9/16. Inktomi (INKT: Research, Estimates), which develops technology that drives Internet search engines, fell 20-5/8 to 211, an 8.9 percent slide. And Earthweb (EWBX: Research, Estimates) shares ended the day 3-1/6, or 10.8 percent, lower at 25-7/16.
Equipment makers buoyed; chips sink
Computer equipment suppliers ended the session mostly higher Monday, sending the Goldman Sachs computer hardware index up 8.32 to 614.34, a 1.4 percent rise on the day.
Dell (DELL: Research, Estimates) got a boost from Salomon Smith Barney analyst Richard Gardner, who upped his price target on the PC maker to 71 from 55 and reiterated his "buy" rating. Dell shares ended the session up 1-1/4 at 57-11/16, a 2.2 percent gain on the day.
Gateway (GTW: Research, Estimates) shares added 2-3/8 to 61-7/8, a 4 percent gain. Hewlett-Packard (HWP: Research, Estimates) ended the session 5-3/16, or 3.7 percent, higher at 144. IBM (IBM: Research, Estimates) added 2-3/4 to 112-3/4, a 2.5 percent rise. Compaq (CPQ: Research, Estimates) edged up 3/16 to 30-7/16.
Computer networking equipment supplier Cisco Systems (CSCO: Research, Estimates) ended the day 7/8 lower at 134-1/8. Meanwhile, Cisco competitor Lucent Technologies (LU: Research, Estimates) slipped 3-1/4, ending the session 4.7 percent lower at 66-5/8. Nortel Networks (NT: Research, Estimates) slid 2-9/16, or 2 percent, to 126-3/16.
Meanwhile, chip stocks, which were mostly higher during first half of the session, fell sharply in afternoon activity. The Philadelphia Stock Exchange's semiconductor index, or Soxx, fell 51.38, or 4 percent, to 1,203.45.
 Among the day's biggest chip losers were: Actel (ACTL: Research, Estimates), down 4-9/16, or 13 percent, at 30-1/2; Anadigics, (ANAD: Research, Estimates) which slid 10-1/16 to 80-3/8, an 11.1 percent decline on the day; Triquint (TQNT: Research, Estimates), which ended 7-1/16, or 8.2 percent, lower at 78-3/4; and Vitesse (VTSS: Research, Estimates), which ended the session 4-7/8 lower at 86, a 5.4 percent decline on the day.
Intel (INTC: Research, Estimates) was among those chip makers escaping the afternoon sell-off, ending the session 5-1/8 higher at 135, a 4 percent gain on the day. The company on Monday unveiled two new high-end Pentium III microprocessors, designed to enhance Internet-based applications such as audio, video, animation and 3-D.
Intel rival Advanced Micro Devices (AMD: Research, Estimates) advanced even more sharply Monday, ending the session 4-1/8, or 8.25 percent, higher at 54-1/8.
The tech-laden Nasdaq composite index ended the session down 188.13 at 4,6100, a 3.92 percent decline on the day. 
-- from staff and wire reports
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