The switchboard at Netscape Communications Corp. has been jammed for days. On June 23, the Mountain View (Calif.) maker of software to navigate the Internet's uncharted World Wide Web announced plans to go public in mid-August. The deal would value at $463 million a company just 15 months old and losing money. No matter: Since the offering was announced, hundreds of potential investors have called Netscape's headquarters, clamoring for information and a piece of the action.

Mention the Internet in a room full of investors, and prepare to get trampled. Providers of Internet software and services are flooding Wall Street with public stock offerings. Stockholders, betting the Net will be as big a catalyst for new markets as the personal computer was, have bid up the shares to breathtaking levels. But as valuations rise, so do doubts. Says Michael Walsh, president of consultant Internet Info: "Some people are saying maybe the emperor has no clothes."

An early sign: Short-sellers are circling, betting prices will fall. From mid-May to mid-June, short-seller interest in NETCOM On-Line Communications Services Inc., an Internet access provider, rose 47%, to 1.3 million shares--15% of its 8.9 million. Some 22% of America Online Inc.'s shares are shorted. Says Michael Murphy, editor of the Overpriced Stock Service newsletter: "These things don't make any sense on a price-to-earnings or a price-to-sales basis."

FANNING THE FLAMES. Granted, even the shorts don't doubt the Internet's ultimate potential. The risk is that, with so many well-heeled companies vying for the same markets, few actually will grab the gold ring. Still, the money keeps pouring in: Venture-capital funding of Internet companies is expected to top $200 million this year, more than four times last year's $45 million, according to Venture One Corp., an investment-research firm. That's double the growth of biotechnology funding in the late 1980s. Says Venture One President David T. Gleba: "Venture investors are paying practically any price to get into the Internet."

Providers of proprietary online services are fanning the flames. Fearful of losing subscribers to the freewheeling Net, they have been paying dearly for Net-related companies to expand their offerings. In March, for instance, CompuServe Inc. paid a massive $100 million, or five times sales, for Spry Inc., a small Web software outfit. America Online has spent more than $100 million since last November to buy six Internet-related companies and products, including $35 million for Advanced Network & Services Inc., an Internet service provider.

But Wall Street is the most frenzied participant of all. Since last December, at least a half-dozen companies have gone public, often quickly doubling their original asking price. Spyglass Inc., which licenses a Web browser, sold its shares at 17 on June 27, raising $28.5 million; by day's end, the stock had soared to 27, or 27 times the company's sales. UUNet went public at 14 on May 25, and closed July 5 at 281/8.

None of this would be worrisome if profits were rolling in. But few companies have figured out how to make much money on the Internet. NETCOM, forced to keep expanding its network to attract new customers, lost $100,000 last year even as its sales soared 417%, to $12.4 million. Netscape, meanwhile, has attempted to seed the market for its $5,000 Internet server software by distributing millions of free Web browsers. It worked--Netscape's browser clearly has become the most popular--but now rivals are coming out of the woodwork.

Meanwhile, the Net is coming under increasing fire--from businesses worried about security breaches and from senators incensed by "indecent" material available to young Internauts. Such obstacles likely won't slow the Net's growth, but they could make Net stocks a "roller coaster," says Harvey Poppel, managing director with Broadview Associates Limited Partnership. Investors had better hold on tight.

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