Could the dog-like performance of the latest flotation of a pets goods website mark a sea change for the whole Internet sector, asks Richard Lander.

That’s the view of David Edwards, president of the New York-based Heron Capital fund management group, who says the time has come for Internet IPOs to show that there is some substance behind all the hype.

'We see 2000 as the end-game year. Companies can no longer keep coming back to Wall Street for junk bonds, preferred stock or more shares,' Edwards told citywire.co.uk. 'They’ve now got to come up with some actual operating cash flow rather than just a pretty business plan and an advert in the Superbowl break.'

That’s why the flotation of pets.com – a site where pet lovers can find anything from grooming advice to organic food for their dogs, ferrets, reptiles and others - was such a disaster, closing the door for other similar venture, according to Edwards.

While most net-related IPOs go to hefty premiums on their first day, pets.com floated at $11 a share when it raised $82 million on 11th February. Since then, the stock has gone walkies downhill to yap rather unhealthily at $6.8.

Needless to say, Edwards did not bag any pets.com shares for his technology and internet portfolio, which is heavy on two categories of stock – first, the big hardware players such as Cisco, Sun and EMC and second, what he calls the ‘future gorillas’ of the Internet, ranging from Amazon to AOL, online advertising group Doubleclick, Yahoo and software house Macromedia.

Macromedia – picked as a favourite on citywire.co.uk in late January – is a company that warms Edwards’ heart: ‘It was a real company before the Net came along and then it transformed its business to reach the new paradigm.’ And of course it makes money.

Right now, Edwards’ task over the coming weeks is to reduce his technology holdings so that the sector is restored to his desired 25% weighting in his overall portfolio. It inflated to almost twice that level after last year’s huge price rises.