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Leap Group is tumbling on Wall Street.

Since going public in late September, the Chicago-based agency has seen its share price drop 30% to $6.875 at the close of business Nov. 6. The decline came even as the two underwriters of the public offering initiated analyst coverage of Leap with "buy" recommendations.

A young shop with a spotty earnings history, Leap is trying to establish a specialty in interactive advertising. Its initial public offering prospectus emphasized predictions that advertisers will soon spend billions touting products on the Internet, other online services and CD-ROMs.


Leap executives would not discuss the stock's drop or recent developments at the company. But in a written statement, Chairman-CEO R. Steven Lutterbach blamed a general market retreat from Internet-related advertising stocks.

"Management knows of no other reason for the decline and feels that the company is proceeding as planned," the statement said.

At Dean Witter Reynolds, one of the underwriters of the $40 million IPO, analyst James Dougherty offers a similar explanation.

"Internet-related advertising stocks are soundly out of favor," he said, noting that a Dean Witter index of such shares has fallen 40% since January.

Donaldson Lufkin & Jenrette Securities Corp., the other Leap underwriter, reportedly issued a "buy" recommendation recently.

Mr. Cahill is a reporter for Crain's Chicago Business.

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