INTERNET STOCKS BOUNCING BACK; HOLIDAY SHOPPING, TRADE PACT FUEL SURGE.

Byline: Eileen Glanton Associated Press 

Call them boomerangs.com.

This past summer, stock prices of many Internet companies tumbled from their April highs as investors dumped shares in favor of bigger, more mature computer companies. Rising interest rates made many investors question the Internet sector's lofty prices, especially as most companies failed to earn profits.

But these days, many Internet stocks are bouncing back and nearing their previous record highs. The promise of a trade agreement with China and the start of the holiday shopping season have lifted the shares once more.

``I think the decline at midyear was related to a combination of short-term factors,'' said Robert Robbins, senior vice president and market strategist at The Robinson-Humphrey Co. Inc. in Atlanta. ``The long-term trend of technology is very solid.''

Just last month, the Center for Research on Electronic Commerce at the University of Texas at Austin said Internet-related businesses are expected to generate more than $507 billion in revenue this year, up 68.4 percent from $301 billion last year.

Companies that sell products over the Internet - from vitamins to sweaters to computers - are expected to generate about $170 billion in sales this year. Revenue is expected to double each year for the foreseeable future, researchers said.

That virtually guarantees a solid future for many Internet stocks, market analysts said.

``The Internet is a very, very real innovation,'' said Robbins. ``It is not a fad. It is not Pokemon. It's here until something better makes it obsolete.''

This past week, investors placed bets that Robbins and other bullish analysts are correct. America Online closed Friday at $83.375, not far from its 52-week high of $87.75. In August, AOL shares closed as low as $41.96875.

Amazon.com, which has expanded its product offerings since last year's holiday shopping season, closed Friday at $93.125. That's up from an Aug. 9 low of $42.75. Amazon.com peaked at $110.625 on April 27.

In a nascent industry, AOL and Amazon.com are among the oldest and most-established Internet companies. Some of the fledgling companies have proven more volatile; eToys finished the week at $66.625, well above its August low of $30, but significantly below its 52-week high of $86, reached in October.

When the bull market roars, investors may not mind paying a high premium on the promise of future growth. That changes when the broader market slumps, analysts said.

``Their valuations are so enormous,'' Robbins said. ``Any time there's a market weakness, these are the stocks that people will consider dumping.''

Nonetheless, many analysts see an increasingly bright future for the Internet sector as more established businesses move online.

AOL got a boost in recent weeks from its latest profit report. The company reported first-quarter earnings of 15 cents per share, three times higher than in the first quarter of 1998. What's more, AOL said it had added more than 1 million new members worldwide.

But many other companies in the sector are losing money, and don't plan on turning profits any time soon. Amazon.com saw losses more than triple in its recently ended third quarter as it opted to spend heavily to expand its online offerings.

When the bull market roars, investors may not mind paying a high premium on the promise of future growth. That changes when the broader market slumps, analysts said.

``Their valuations are so enormous,'' Robbins said. ``Any time there's a market weakness, these are the stocks that people will consider dumping.''

Nonetheless, many analysts see an increasingly bright future for the Internet sector as more established businesses move online.