It is so quiet in the Internet-deal game lately you can practically hear a stock drop. Merger-and-acquisition activity in the Web arena has slowed markedly over the past several months. One big reason: the widespread drop in Internet-stock prices. Without rapidly appreciating stocks to use as currency, executives at many Web companies say they are holding back on the buying spree of new companies -- typically small, private ones that they have gobbled up in the past to expand their reach or add new technology features. Web companies have also found they need to digest previous acquisitions. And there is a glut of private financing available to small companies to help them ward off publicly held suitors. Finally, companies want to see how potential acquisition targets, particularly Web retailers, perform over the holiday season before making more bets. "The frenzy has died down a bit," says Ellen Siminoff, senior vice president and chief deal maker for Yahoo! "The combination of the stock market's volatility and the energy that is going into absorbing the big deals we have all done makes for quieter times." Internet-related transactions peaked in the early summer, with 64 deals in May and 64 in June, before dropping to 23 in July, according to Broadview International, a consulting company that specialises in mergers and acquisitions. August brought 57 deals, but that's still only at April's level. Moreover, most of the late-summer pacts were minuscule in value compared with the multibillion-dollar extravaganzas earlier this year. May transactions totalled $8.6bn -- more than all those struck in June, July and August combined, according to Broadview International. Typical of the giant transactions were America Online's $10bn acquisition of Netscape Communications, the $6bn merger of At Home with Excite, creating Excite At Home, Healtheon's $7.9bn purchase of WebMD and Yahoo's acquisition of GeoCities for $5bn and of Broadcast.com for $5.7bn. While they were acquiring heavy hitters, these players also were adding many smaller companies. AOL spent $525m on MovieFone in April and went on to buy the When.com Web-calendar service for about $150m and Web music firms Spinner.com and Nullsoft for $400m. Amazon.com this spring spent $645m on a trio of private Web companies: Exchange.com, Accept.com and Alexa Internet. The online auction site eBay paid $260m for an offline auction business, Butterfield & Butterfield. Yahoo! kept up its binge, buying one software company for $130m in May and another for $80m in June. For now, many major Internet companies are idling their acquisition motors. After CMGI bought Compaq Computer's AltaVista search site for $2.3bn at the end of June, a spate of rumours about a range of Internet-company mergers -- including rumours about EarthLink Network, MindSpring Enterprises and theglobe.com -- led nowhere. And the only significant activity recently has been two tiny purchases by Web portal Lycos, which shelled out $71m for Internet-music software maker Sonique in August and $78.3m for financial-news site Quote.com last week. Brett Bullington, one of Excite At Home's deal makers, says most companies now prefer to make multimillion-dollar investments in smaller Web firms rather than make outright acquisitions. His company has put $2.5m in E-Stamps and $15m in Tickets.com, which offer postage and tickets. "We have all seen the ups and downs of the stock market, so we have been adjusting our appetites for now," he says. "When the market returns, everyone will get hungry again." It will take some rebound. AOL's stock has stagnated most of the last month in the $90 range -- half its value earlier this year. Yahoo shares are off a bit less, hovering around $160, but well off spring highs of $200 and above. And Excite At Home is now just below $40, down from about $100 less than six months ago. "The dot-com currency has been the primary medium of exchange, rather than cash, so there is obviously going to be fall-off," says analyst David Readerman of Thomas Weisel Partners, a San Francisco-based merchant bank. "And it isn't as likely that the valuations are going to shoot up to those highs, but rather that the top companies will grow into higher valuations as they increase their revenue and profits." That might change after the new year, say some Web executives, if online selling takes off over the holiday season, pumping up stock prices. But a stronger market also could prompt some small companies to prefer raising funds in an initial public offering rather than get acquired by a company with deeper pockets. In fact, several dozen Internet companies are poised to go public over the next month, including sites selling everything from gardening products to groceries. "Everyone has a lot of money right now that has been thrown at entrepreneurs, and we are all seeing what we can do with it," says Julie Wainwright, chief executive officer of Pets.com, a start-up aimed at the pet products market. Pets.com got a $50m slug of cash in June from a range of investors, including Amazon. "Not everyone is going to win, obviously, so I think you will see another rash of mergers after Christmas, especially if the market does not come back for IPOs," predicts Wainwright. "Like we say in the pet business: You either get bigger or you get eaten."