Digex Inc.'s first initial public offering made it a Washington area Internet legend in less than a year.

The second Digex IPO has become an Internet loser in less than a week.

The Beltsville company was primarily an Internet service provider when it went public in 1996. Nine months after it sold those shares, Intermedia Communications Inc. of Tampa bought out all the shareholders for $150 million. Digex was the region's first hot Internet deal and made eccentric founder Douglas Humphrey the model for instant Internet millionaires.

Now transformed into a Web site developer for big corporations such as Budget Rent a Car and Kraft Food Service Inc., Digex was spun off by Intermedia last Thursday.

The second IPO hit the market just in time to be swept away in the latest Net stock sell-off.

Digex sold $170 million worth of stock in last Friday's offering, which was so popular with investors that investment bankers were able to bump up the price of the stock to $17 a share at the last minute. It had been expected to sell for between $14 and $16.

The new Digex stock hit $23.50 early in the first day of trading but dropped to $22.31 1/4 by the end of the day and has been sliding ever since. Yesterday the stock lost more than $3.50, closing at $15.50 on the Nasdaq Stock Market, where it trades as DIGX.

New Net stocks are not what Wall Street wants these days. Four Internet companies went public on Tuesday, and by the end of the day, all four were trading below their initial offering price.

Yesterday, the market for Internet issues got worse. The Net stock index created by TheStreet.com lost more than 5 percent as all the major Net stocks took hits. Shares of America Online Inc. fell for the fifth day in a row, down $1.37 1/2 at $87.43 3/4. Network Solutions Inc. stock continued its six-day slide, closing at $55.56 1/4, down almost $1.50.

Recent IPOs are being hit hardest in the summer slump. Shares of Value America, the Charlottesville online retailer that went public in May at $23, dropped $2 yesterday to $10.31 1/4, their all-time low. Also hitting a new lifetime low yesterday were shares of CareerBuilder.com, the Reston online employment service, which closed down 62 1/2 cents at $7.37 1/2.

Analysts said there were no developments yesterday that explained the continued slump in Internet stocks--except the sell-off itself. Tech stocks have taken a summer shellacking for three years in a row, and once they started to slide, traders figured it was that time again.

"We're following last year's pattern almost exactly," Wheat First Union strategist Don Hays said in his daily market commentary.

DIGEX

Business: Hosts Web sites and Web-based applications for more than 550 businesses and institutions; also provides firewall management and Web site activity reporting.

Based: Beltsville

Employees: 450

1998 sales: $22.6 million

1998 net income: $16.6 million

Ticker symbol: DIGX on the Nasdaq Stock Market

Web address: www.digex.com

SOURCES: Hoover's, Bloomberg News