Like a sailor testing the wind, a small Las Vegas Internet company checks every morning to see whether the moment's right for going public.

It wasn't in late June, when Travelscape.com first pulled back from the brink. And it certainly hasn't been in recent days, when Internet stocks of all types have been swooning.

"We're taking a day-by-day approach," said Linh Ly, director of investor relations for the eight-month-old discount travel Web operation. "We're hoping. That's all we can do."

Over the past year, Internet companies have lived on hope--that their stocks would double and triple on the first day of trading, that they would keep going up afterward, that they would eventually find a way to earn a profit or, in some cases, merely have a product that someone would pay actual money for.

Those expectations are now fading. Instead, investors are running for cover before the storm gets worse. Today, the stock of many of the Internet companies that had gone public in the past year, including the Web community operator Theglobe.com and the financial services site TheStreet.com, hit new lows.

Meanwhile, the much-admired big guns--eBay Inc., Amazon.com Inc., Yahoo Inc.--have all plummeted more than 50 percent in just a few months.

"Everyone's being taken to the woodshed," said Richard Peterson, market strategist for Thomson Financial Securities Data. "There are no survivors."

The lone Internet firm to start trading today--Internet Initiative Japan Inc.--actually managed a gain. Offered at $23, it closed at $31.31 1/4, up $8.31 1/4. That was a sharp improvement over Tuesday, when all four Internet debuts closed lower, including the heavily hyped 1-800-Flowers.com. (Before Tuesday, only three Internet stocks this year failed to go up on the first day of trading.)

"The trouble is, we expected Internet Initiative Japan to be explosive because of those two magic words, 'Internet' and 'Japan,' " said Irv DeGraw, research director at WorldFinanceNet.com. "We thought this would be a moonshot--a 100-percenter that would sustain value for a while."

Moonshots are over, at least for now.

"The bubble has burst," declared Ulric Weil, an Internet analyst for Friedman, Billings, Ramsey Group Inc. in Arlington. "It's not that we didn't expect this to happen. It was just a question of how long the euphoria would last."

Weil ascribes the downturn to macroeconomic forces--the increase in interest rates and labor costs, plus recent hints of inflation. "The indicators are just not as sanguine as they were two years ago," he said.

For DeGraw, who is also a finance professor at Eckerd College in St. Petersburg, Fla., the decline in Net stocks is rooted in their very nature.

"After two years, we've yet to see the kinds of progress that we would have expected," DeGraw said. "The possibility of profits is being pushed out further and further, to a point where it's probably not in our lifetimes. So there's growing skepticism that the basic Internet retailing strategy is ever going to work."

While most established non-Internet companies don't have to worry too much about fluctuations in their stock, a complicating factor for firms such as Amazon and Yahoo is that their acquisitions are always made with stock. When share prices have a sustained sharp decline, "it hampers their ability to operate as they did previously," said Peterson, the Thomson strategist. "So there will be fewer mergers and acquisitions."

Amazon, the leading online retailer, has been on a buying spree, taking recent stakes in Pets.com, Drugstore.com and HomeGrocer.com. "I'm sure the currency of choice was their equity," said Peterson. "I'm not privy to what is in their contracts, but obviously they were done at a time when the stock was in triple digits."

Whether the current downturn is just a substantial bump in the road or something much more nasty will become evident quite soon. Between now and the end of September, nearly 100 Internet companies are scheduled to go public--nearly as many as the 125 that issued stock so far in 1999.

Randall Roth, an IPO analyst at Renaissance Capital Corp., sees the wanna-bes breaking into three groups.

"The ones that aren't in dire need of capital to keep their operation going are going to sit back and let things drift a while. The ones that will go public will be those who feel they have such a good franchise, such a good product, they don't have to worry--and those who really need capital."

After the bloodshed, he looks for a more stratified market.

"People won't buy things just because they're dot com. They'll look at the sector of the Internet the company is in. There are going to be a lot of questions. The 'buy 'em all, let God sort 'em out' mentality doesn't work anymore."

Staff writer Mark Leibovich contributed to this report.

CAPTION: NET RETREAT

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