While only 10 percent are considered 'financially troubled,' virtually every Internet company we have come across is tightening its belt. Clearly, the company has a lot of work in front of it.

Yahoo! is embarking on a major transformation. The company must now prove that online advertising is cost effective and integral to the marketing mix of traditional advertisers.

Furthermore, eBay -- which has held up relatively well versus other leading Internet companies -- has little valuation support.

The company must now prove that online advertising is cost effective and integral to the marketing mix of traditional advertisers. There is an expectation that after six to nine months of calling on traditional advertisers, dollars will come pouring in. Our research suggests that turning 'toe-dipping' budgets into real dollars may take over two years.

We are hopeful that the company will lay out more conservative guidance for 2002 as a means to rebuild credibility with investors.

Last year they had a big contribution from selling company stakes. Next year they won't have that.