PALO ALTO, Calif, July 27 (Reuters) - Merger talk in the
telecommunications industry on Monday eclipsed the high-flying
Internet sector, where many stocks took a rare dip amid
uncertainty over how the news would affect them.
Almost all the major Internet stocks were down as companies
said they were not sure what a potential combination of Bell
Atlantic Corp. BEL.N and GTE Corp. GTE.N, would mean for
the growth of their businesses.
Shares of Internet navigation company Excite Inc. XCIT.O
ended trading down $2.375 at $42.25 and rival Infoseek Corp.
SEEK.O fell $1.875 to $27.125 on Nasdaq. The No. 1 navigation
service, Yahoo! Inc. YHOO.O, which had traded lower on Nasdaq
most of the session, rebounded right before the close to end up
$7.06 at $189.19, although analysts said they did not think the
rise was related to the telecommunications merger discussions.
Despite Monday's price falls, Excite Senior Vice President
Joe Kraus was optimistic.
"Our business is based on critical mass, and insofar as
this pact could help increase the number of people on the
Internet, we think it is fantastic," Kraus said.
Telecommunications companies have been clamoring to get
into the Internet business, and AT&T Corp. earlier this year
was reported to have been interested in buying Internet service
provider America Online Inc. AOL.N.
But that telecommunications giant now appears more
interested in investing in the technology behind the Internet
than in buying an online service outright.
Telecommunications mergers could also benefit the Internet
business, but it will take time -- and money. Analysts say that
by pooling resources, telecommunications companies could be
better positioned to promote their Internet services, and build
large networks to support electronic commerce and other online
services.
"The Internet companies want more bandwidth," said
PaineWebber analyst James Preissler. "And for that, a lot of
capital would first need to be committed."
Bandwidth has become one of the buzzwords in Internet
circles as even the most popular online services recognize they
can only grow as fast as the underlying technology -- the cable
lines and telephone wiring -- permits.
A spokesman for At Home Corp. ATHM.O -- a popular
Internet business that provides Internet access via cable TV
lines that are much faster than the telephone lines most Net
surfers use to access the Net from home -- said on Monday the
company had no immediate reaction to the telecommunications
merger talks.
At Home shares fell 75 cents to close at $46.50 on Nasdaq.
REUTERS
Rtr 22:29 07-27-98
Copyright 1998, Reuters News Service
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