Local tech stocks copped another beating on the ASX this morning after the Nasdaq composite index fell another 3.16 per cent, or 132.3 points, to 4055.9 overnight.
The ASX All Ordinaries fell 31.9 points to 3155 yesterday as investors lost faith in technology and internet stocks and switched to their blue-chip counterparts. The All Ords wasn't helped yesterday by falls in top 20 companies Telstra and News Corp.
While News has continued its fall today, down $1.05 to $22.10 this morning, Telstra has performed better, lifting to $7.69, an increase of 17 cents on the day's opening.
However, the telecommunications giant, which said in a statement to the ASX today that it is in an advanced stage of discussions with Hong Kong-based mobile telephony company Pacific Century CyberWorks, was among only a few IT stocks having a profitable day.
Music etailers Sanity.com and ChaosMusic were down 7 and 8 cents respectively, online advertising company emitch was down 9 cents, software developer Technology One was also down 9 cents, while counterpart Sausage Software was down almost 30 cents to $4.71.
Solution 6, which is in the process of buying Melbourne-based Sausage, was down 47 cents to $8.33, while ecommerce security company SecureNet continued its fall which saw the company drop 26 per cent yesterday alone. SecureNet was down 72 cents to $9.48 for the day.
Also in the red today were Melbourne IT, down 30 cents to $9.95; search engine LookSmart, down 31 cents to $2.44; Open Telecommunications, down 95 cents to $10.10; and FTR Holdings, Malcolm Turnbull's IT investment vehicle, down 6 cents to $0.69.
Despite the heavy flow of cash away from the technology sector, the principal of internet consultancy www.consult, Ramin Marzbani, said it would take a "very brave man" to predict that there was an official correction taking place in the market.
Marzbani said most investors were prepared for the "amazing volatility" the market was demonstrating. "What goes up, tends to comes down at the moment. Then it goes up again."
He said a majority of investors in technology and internet stocks would not be perturbed by the decreasing value of their stock, as most had already made a healthy profit on their original investments.
Professor Ian Harper from the Melbourne Business School agreed with Marzbani, saying that new technologies were changing the underlying fundamentals of business strategies. However, no one really knew the full extent of those changes.
Harper said he did not believe the market was a "straight out speculative bubble". Instead, he said there was a sound basis for the success of many technology companies in the longer term. "No one knows the real value of these companies, but the potential for some of them is staggering."