Small Internet Stocks Lose Their Luster Some Share Prices Have Fallen By 75 Percent Or More This Year

Investors who were banking on small Internet companies need to think again.

Many former high-fliers have seen their share prices plunge by 75 percent or more this year. Netscape Communications Corp., Netcom Online Communication Services Inc., Spyglass Inc., and Yahoo Inc. have plummeted back to earth as bigger and better-financed rivals barreled through their markets.

At the same time, large companies such as Sun Microsystems Corp., Microsoft Corp. and Cisco Systems Inc., who have jumped on the Internet bandwagon, have seen their share prices take off.

“There was a craze and then reality hit,” said Dick Goers, senior technology strategist for Zurich Kemper Investments, which still owns Netscape and networking stocks. “Large companies started making major announcements and really competing.”

A year ago, the Internet’s promise was epitomized by Netscape, the start-up that helped spur the popularity of the global computer network.

Now, like some other Internet companies, Netscape’s future is uncertain. Microsoft, the largest maker of personal computer software, has concentrated its marketing and development resources to create Internet software, leaving Netscape scrambling to keep in step.

Since its high of $85.50 last December, Netscape is down 57 percent to $36.625. Microsoft, meantime, trading at $122.50, up 35 percent since December, when it outlined its Internet plans

The scenario is replayed across the board. Netcom and PsiNet Inc. a year ago were considered the pioneers in linking subscribers to the Internet.

Since then, the three biggest U.S. long-distance companies, AT&T Corp., Sprint Corp. and MCI Communications Corp., as well as most of the Baby Bells, have introduced competing services.

Netcom’s shares now trade at $18, down 78 percent from a high of $82.75. PsiNet trades at $10.625, down 63 percent from a high of $28.50.