Stock Drama Moves to Europe

LONDON (04/18/2000) - Europe played the me-too game yesterday, with tech stocks following the Nasdaq's Friday losses into the doldrums, but rising slightly after the Nasdaq opened Monday on an up note.

In France, Germany and the U.K., home to three of the major high-tech alternative markets, the day started off with panic-stricken selling evocative of Friday's pandemonium in the States, but the markets recovered slightly at the close. Even as the markets make like yo-yos, the Internet companies at the heart of the hubbub are claiming the high road. "We prefer to concentrate on developing the underlying strength of the business rather than focusing on how the capital markets react," says Paul Barker, investor relations contact at Freeserve. "We didn't comment when [the stock] went to nine pounds a share and we won't comment now that it's at £3.50."

Europe's exchanges have experienced a flutter of excitement in recent months over offerings from the likes of Lastminute.com and World Online. But as those shares proved disappointing - each traded Monday at less than 60 percent of its offering price - Europe's financial heads nodded sagely. In their eyes, the price drops indicated that Nasdaq-style stock inflation stood no chance on these sensible shores. "Because the Internet has been dominated by the U.S., individual countries within Europe have been overlooked," says Ed Burt, managing director of the U.K. Internet company Searchengine.com. "We anticipate that this market correction will lead to the re-establishment of traditional values whereby a company succeeds by meeting the needs of a local market. That must be good news for European countries."

The July 1999 float of Freeserve marked the first spectacular success of a young, money-losing company on a European stock exchange. But despite that early promise of riches, and the strong October and November offerings of Terra Networks in Spain and Tiscali in Italy, few subsequent floats have been inspiring. The Freeserve float did encourage Europe's venture capitalists to begin sinking money into the Internet like their U.S. counterparts, but other public offerings have not shown the same success.

Today, only nine months after Freeserve floated, much of Europe's financial community is ready to write off the Internet as a bubble that should have been ignored in the first place. Good businesses are still good businesses, but "dot-com" is no longer synonymous with a sky-high valuation. The markets here made a modest recovery after the Nasdaq opened on an up note, but their recovery was far from spectacular. The Nouveau Marche in Paris closed down 218.68 points at 4307.63, losing 4.8 percent on the day but rising above the low of 3894.05. In Germany, the Neuer Markt was looking robust at the end of the first day of trading for Deutsche Telekom's Internet service business, T-Online. The Neuer Markt closed at 6338.78, down 79.43. At close, the TechMARK 100 index was down 137.58 at 3390.55.

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