The Internet sector enters
this week in desperate need of a hero. Over the past year investors
have moved from one concept to another, from B2C e-commerce to e-banks,
from e-brokers to infrastructure and B2B e-commerce, from utopian
dreamland to utilitarian reality, creating parabolic
stock prices runups in each group and causing equally steep declines
as they abandon the old flavor of the day and move on to the latest idea
of the day.
The end of the public's fever for
when combined with the "going concern" warnings swirling around
several publicly traded companies, leaves the Internet sector in a precarious state,
with the pin already entering the bubble and the final pop not far off.
For many cash strapped B2C companies,
the last hopes for their corporate survival have been eliminated by the
recent decline in the sector. A company with expanding losses and
negative cashflow that uses its rising stock price as a means of raising
cash to finance day to day operations is a company that will quickly find
its means of support taken away when its stock declines, as shareholders
in Peapod, CDNow, and DrKoop.com will attest. It is likely that
there will be many more Dr.Koops in the coming months if the public's love
affair with pureplay Internet stocks continues to dissipate.
[Note: Stocks are ranked by Price/Sales Ratio]