Time to Take Stock of the Internet.

DAVID HOLTMAN SAW FIRST-HAND the impact Internet hearsay can have on stock prices when he was chief technology officer at Network Solutions Inc. (NSI) five years ago. NSI had just embarked on a fragile IPO, and was getting hammered on message boards. "We would see somebody post something and the price would drop," recalls Holtzman. Calls to the investor relations department mirrored online discussions. For seven months, NSI stock bounced around like a bad e-mail. "The Internet is the biggest water cooler in the world," Holtzman says.

Opinions online tend to grow legs. An angry shareholder posting on Raging Bull, Motley Fool, or F -- ked Company, to name the high-profile message boards, is a time bomb no CEO can afford to leave fused.

Yet according to a Chief Executive and Hill and Knowlton survey released last

May, only 15 percent of executives polled monitor very closely what's said about their companies on the Internet. Forty-three percent said they don't monitor at all. This despite the crop of buzz gauges -- CyberAlert, eWatch, and Cyveillance, for example-that have sprung up to track online rumors. What gives?

"I think companies have rested for many, many years on the idea that consumers generally have a hard time finding out what's going on with a company unless the media picks it up," says Holtzman, who after leaving NSI founded Opion, a company that quantifies the subjective worth of a company based on Internet buzz. "That's traditionally been the role filled by media like '60 Minutes' and The Wall Street Journal. But now everybody can do it for themselves. It's a big mistake for companies to assume that word won't get out. [The Internet] will force CEOs to be more proactive."