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Internet companies survive wild week

Digex and Paradyne, two companies with area connections, went public at the right time to handle this week's roller coaster.

Digex and Paradyne, two new public companies with Internet allure and Tampa Bay connections, recovered Friday from a wild week endured by investors in such stocks.

"We live in a pretty volatile market space," said Curtis Lightburn, vice president of investor relations for Intermedia of Tampa, Digex's parent. "Investors recognize there's volatility with high-growth industries."

Stocks of Internet technology companies were hit hard Wednesday and Thursday morning before bouncing back Thursday afternoon.

"It was about the craziest day ever," Jay Ritter, a finance professor at the University of Florida, said of Thursday's trading. Stocks in the Internet group swung 17 percent, compared with typical fluctuations of 2 percent to 3 percent.

Digex, a "web-hosting" company in Beltsville, Md., that manages Internet technology for companies such as AMC Theatres and Ford Motor Co., raised $170-million at $17 a share with its public offering July 31. Its stock closed that first day at $22.31\.

Digex skidded to $15.50 a share Wednesday, but bounced back, closing Friday at $20.18}, up $1.31\.

"Despite the market swoon, Digex is up almost 20 percent," Lightburn said.

Largo-based Paradyne Networks Inc., which makes computer networking software and equipment, saw its stock triple in its first day of trading July 16, closing at $56.25. It, too, had a rough midweek stretch, closing Wednesday at $37.37{. Friday, the company's shares closed at $40.75, up $3.21~.

Companies such as Digex and Paradyne had good reason to be thankful they were past their IPOs when this week's turbulence hit. Inc., an Internet flower retailer, and Inc., an insurer that offers quotes online, were not as lucky.

Both saw their shares tumble their first day of trading Tuesday and remain below the public offering price throughout the week. The flower merchant's stock went public at $21 a share but closed Friday at $17, up $1., which was initially priced at $11, inched up 6\ cents Friday to $8.56\.

Other companies decided not to take the plunge. Eight of 11 planned IPOs were postponed Friday; among them Networks of San Mateo, Calif., and the floral delivery service Analysts said they were scared off by the volatility demonstrated this week.

The markets are getting a much-needed dose of Internet reality, said John Hodulik, an analyst with PaineWebber in New York, especially when it comes to the limited profit potential of startups catering to limited markets such as flowers and books.

The 40-stock Dow Jones Internet Index has shed half its value since it hit an all-time high April 13.

However, Hodulik said companies that offer Internet infrastructure services, such as Digex and Paradyne, have a bigger market.

"I wouldn't use this week's ups and down as a benchmark" for such companies, he said.

_ Information from Times wires was used in this report.