The stock market enthusiasm over many things Internet is not carrying over to the new breed of dot-com lenders.

E-Loan Inc. of Dublin, Calif., was trading at $16.375 Thursday afternoon, compared to its July 6 high of $74.75. The company, which in its June initial public offering raised $49 million, is approaching the end of its lock-up period, after which insider employees would be able to sell their shares on the open market.

The shares of Mortgage.com, a similar Web lending service, were at $5.9375 Thursday, down 74% from their August high. Questions have been raised about whether the Plantation, Fla., organization can raise as much capital as it will need in the near term to fund its operations, company officials said.

All this may not bode well for LendingTree Inc. of Charlotte, N.C., which last month filed for a $30 million IPO.

These examples are in stark contrast to the high-fliers in various markets that have managed to bask in the Internet glow. For instance, Verisign Inc., a Mountain View, Calif., provider of digital certificate technology, was trading at $185.75 late Thursday, up from a split-adjusted $14.781 at the start of 1999. Atlanta-based Checkfree Holdings Corp., a leader in electronic billing and payment processing, was trading at $103.75, up 343% in 1999. S1 Corp. of Atlanta, a leader in home banking software, was at $76.625, up 151%.

"Irrational exuberance for the dot-coms is getting more and more selective," said Arthur K. Bender, a San Francisco-based analyst at Sutro & Co. He said business-to-business electronic commerce is hot, "e-tailing" is not.

To be sure, Internet lenders are gearing up for an expected boom in on-line financial services. Forrester Research has predicted that annual mortgage lending volume on the Internet will be $91 billion by 2003, or nearly 10% of today's market. The Mortgage Bankers Association of America has estimated that $1.1 trillion of mortgages were funded in 1999.

Mortgage interest rates have been slowly rising - the current average for 30-year, fixed-rate loans is 8.06% - but are still low by historical standards. Sales of existing homes remain strong, at an annual rate of 5.09 million units in November, up 6% from the previous month, according to the National Association of Realtors.

Industry experts say the market's cold shoulder to Internet lenders is not surprising because they face the same business challenges confronting traditional companies. Apart from the rising-rate environment, loans that are originated on-line are still largely processed on the back end using conventional means and thus have similar costs.

Scott Cooley, an influential observer of the industry and president of Contour Software Inc., a subsidiary of First American Financial Corp. in Santa Ana, Calif., said Internet lenders "still have the same infrastructure that any traditional mortgage company has."

"On top of that, they are spending a huge amount of money on the technology side to maintain an Internet presence," he added. E-Loan, in particular, though a leading Internet mortgage originator, has no substantial advantage over a large and growing field of "nearly identical on-line multilender competitors," Mr. Cooley said.

With the lifting of the insider sales restriction, as many as 33 million employee-owned shares could flood the market and help drive E-Loan's stock price closer to its IPO level, making it difficult for investors to "commit to a secondary" offering, said Sutro's Mr. Bender.

E-Loan will have to raise capital sometime in the next few quarters because "they're losing a lot of money," he said. "At some point they will run out of cash. If they can't raise money, they're in a lot of trouble." E-Loan's third-quarter revenues of $5 million were up 138% from a year earlier, but its net loss quadrupled, to $13 million.

Seth Werner, chairman, president, and chief executive officer of Mortgage.com, said his company raised $56 million in its August IPO, just half the $112 million it had hoped for. After retiring $41 million of debt and paying underwriters, Mortgage.com netted only $13 million.

Mr. Werner, who said he hopes to raise an additional $25 million to $50 million privately, said his company is under close scrutiny by Wall Street analysts. "We are in a rising interest rate environment," he said, "and we are working on this capital investment to supplement our IPO."

"Until the capital situation is put in place, we will continue to see disenchantment with our stock," he conceded. "I just have one mission in that regard, and that is to do what has to be done on the capital side."

LendingTree, meanwhile, has said it would use proceeds from its IPO to significantly boost its marketing and advertising budget. The company, which has 100 employees, also hopes to hire people and enhance its Web-site offerings.

LendingTree links consumers to a network of more than 90 lenders who bid for individual mortgage, home equity, and auto loan applications. It received 212,000 loan requests in the quarter that ended Sept. 30. Participants closed $266 million of loans, compared to $9.9 million in the year-earlier quarter.

The three-year-old company lost $16 million through the first nine months of 1999, compared to a loss of $3.5 million in the 1998 period. It expects to operate in the red until 2002. Merrill Lynch & Co., Lehman Brothers, Prudential Securities, and Wit Capital Corp. would manage the deal. Its timing was not disclosed.

Mr. Bender said raising capital in the current environment would be tough for "any mortgage company." The nation's leading lender, Countrywide Credit Industries Inc., he noted, is trading at about $25 a share, close to its book value.

"I would imagine that the institutional audience for this IPO is uncertain," he said of the LendingTree plan. A public offering in early 2000 would come at the "low point of the mortgage market."

Marc Hochstein contributed to this article.

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