NEW YORK MARKET; Nuts and bolts internet stocks are the new stars

INTERNET shares are back after a crash that saw many of the stocks tumble 50 per cent or more from May until July. The new stars of the market aren't the retailers that led the previous surge, though - they're the newly public "infrastructure" companies, including Sycamore Networks, Commerce One and Liberate Technologies, which make the bridges and roads of the internet - the fibre-optics, software and semi-conductors that speed access and make business possible.

"Early in the year, the Amazons and eBays had the most spectacular performances, but during the latter half we've seen a shift toward the infrastructure companies," said Steven Tuen, manager of the $750m (pounds 463m) Internet Fund. "Those are the ones that have been taking off lately, especially in the IPO area."

Sycamore Networks illustrates the trend. The company, whose products allow faster data flow, soared almost five-fold in its first day of trading last month and is now up 592 per cent. "Sycamore is helping to make the cement that builds the ebusiness foundation," said Rich Begun at Orbitex Management. "Infrastructure is the foundation that allows ecommerce to take place," and faster, more efficient communication is key for developing internet technology.

Commerce One, which helps link buyers and suppliers on the internet, has posted the biggest return in the Bloomberg Internet Index since its June IPO, soaring 1,465 per cent.

Many internet retailers have been left behind - the worst performer among recently public net companies being Musicmaker.com, a CD retailer that is down 42 per cent from its offering price. It has plenty of company among other retailers on the list of stocks in the red. Amazon.com is still 26 per cent below its April high.

Wall Street can expect a continuing stream of infrastructure companies to begin selling shares to the public, said Paul Cook, who runs the $2.5bn Munder Net Fund. "There are momentum factors out there that propel the business prospects of these companies," he said.

"There are some very interesting companies that are becoming public soon."

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