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Day of reckoning for Nets
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April 14, 1999: 4:34 p.m. ET
Broad drop in high-flying sector after run of upbeat sessions; tech earnings roll on
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NEW YORK (CNNfn) - Internet stocks faced a day of reckoning of sorts Wednesday as billionaire Warren Buffett, and several Wall Street seers expressed doubt about the sector run in recent days.
The "Sage of Omaha," Buffett said he does doesn't own any high-tech or Internet stocks and doesn't plan to. That was followed by key analysts who said valuations of Internet-related issues are getting more wildly inflated.
The drop, coming off of several days of successes, was widespread -- hitting portals, online advertisers, and Internet-based brokers, which enjoyed a scorching run in recent days.
Among the biggest losers was high-speed Internet access provider @Home (ATHM), which tumbled 25-1/4 to 148, or 15 percent, after the company said it had a first-quarter net loss of $8.9 million, or 7 cents per share. That matched analysts' targets as compiled by First Call Corp.
Infoseek (SEEK) sank 19-1/8 to 60-3/8 after Salomon Smith Barney cut its earnings target for fiscal 1999 by 15 cents, to a loss of $1.50 per share and fiscal 2000 targets by a quarter, to a loss of 95 cents per share.
The portal announced Tuesday after the bell a narrower-than-expected loss in its first quarter -- but one far larger than a year ago. BT Alex. Brown downgraded the stock to "buy" from a "strong buy" Wednesday.
Among the top Infoseek rivals, Yahoo! (YHOO) fell 12 to 191, Lycos (LCOS) lost 4-9/16 to 98-1/8, and Excite! (XCIT), which is headed toward merger with @Home, shed 19-3/8 to 150-5/8.
Also tumbling was USWeb (USWB), a provider of Internet services for businesses, sinking 8 to 24-11/16, or roughly 25 percent. Advertiser DoubleClick (DCLK) fell 19-3/4 to 135 and RealNetworks (RNWK) slipped 39-1/2 to 189-1/2.
The online brokers finally gave up some ground after brilliant runs in recent sessions. Ameritrade (AMTD) sank 25-1/4 to 148, as E*Trade Group (EGRP) fell 12-5/8 to 112-7/8.
"There's been more blood being let in the sector than I've seen in long time," said Al Goldman, chief market strategist with A. G. Edwards in St. Louis. "Everybody and their shoe shine boy knows we're highly valued in the sector."
The market woes were relatively confined to high-tech and Internet issues. The Dow Jones Composite Internet index fell 30.28 points to 288.04, or a drop of 9.5 percent, while the Dow industrials rose 16.65 points to 10,411.66.
"The whole sector is off and the market's up," said a surprised Scott Ehrens, Internet analyst with Bear Stearns. "I'm viewing it as a buying opportunity in the top flight names."
The Nasdaq Composite fell 76.02 points, or 2.9 percent, to 2,507.48.
Earnings billboard full
With earnings season rising to a head, investors lined up to inspect the reports of those companies announcing on Wednesday.
Atop Wednesday's plate of earnings was Apple Computer (AAPL), rising 1-1/8 to 35-3/4. The personal-computer maker was expected to report second-quarter earnings of 57 cents per share, according to First Call.
And low-cost chip maker AMD (AMD), which warned earlier in the quarter it would post a loss, lost 1/4 to 14-3/4. Analysts polled by First Call expected AMD to post a loss of 92 cents per share for its second quarter.
Meanwhile, shares of rival Intel (INTC) tumbled 3-3/8 to 57-1/8 a day after reporting first-quarter profit that beat analysts' estimates by two cents a share.
But Intel revenues weren't as high as analysts had expected -- suggesting price pressures are strapping its top-line growth.
Software players, telecoms move
In the software world, Symantec (SYMC) climbed 1-1/8 to 14-1/8, after the maker of security applications said it named former IBM (IBM) executive John Thompson as president and chief executive officer.
In telecom, cell-phone network operator Sprint PCS Group (PCS) lost 8 to 47-1/2, or 14 percent, as Morgan Stanley Dean Witter downgraded the issue to "neutral" from "strong buy." Long-distance firm Sprint (FON), from which Sprint PCS was spun off, fell 5 to 103
Meanwhile, wireless communications carrier Leap Wireless International (LWIN) gained 3-5/16 to 20-7/16, a day after announcing it would buy for $50 million the half of Chile's Chilesat PCS it doesn't own.
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