UK e-biz forecast: gloomy

Freeserve, Amazon.com fallout could signal even harder times for dot-coms

It was expected to be a rough day for UK high-tech shares Monday after bad news from the US and the collapse of Dixons' (quote: DXNS) bid to sell ISP Freeserve (quote: FRE) to Germany's T-Online.

In early trading, the blue chip FTSE 100 stayed on an even keel losing just .4 points by midday. Freeserve, on the other hand, dropped 20 percent to 351p and techMark 100, heavy on Internet startups, fell 1.3 percent or nearly 45 points to 3,397.

On Friday, the US' tech-focussed Nasdaq market slid 91.5 points, or 2.32 percent, to 3,845.34. The drop, partly sparked by a 19 percent slide by e-commerce darling Amazon.com, could signal the next stage in the ongoing meltdown of dot-com companies, where even market leaders with established online businesses could have difficulty convincing the markets to give them the money to keep going.

Amazon fell after Morgan Stanley Dean Witter analyst Mary Meeker said there would be some modest downside to the retailer's second and third quarter earnings.

Lehman Brothers credit analyst Navi Suria also questioned the money-losing company's creditworthiness.

"We will perhaps be a little bit lower because of the Nasdaq drop due to Amazon.com putting pressure on all the Internet companies and tech stocks," said Amin Naser, managing director of Cantor Fitzgerald in Frankfurt.

More details to follow.

Reuters contributed to this report.

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