>>#2. Will not happen. [Internet] "Shares surge on growth view"
NEW YORK (CBS.MW) -- Internet stocks soared Wednesday as analysts voiced optimism that the industry is the throes of showing off its growth potential.
The Goldman Sachs Internet Index leaped 7.2 percent, closing at an all-time high of 363.79. The Amex Internet Index rocketed 3.7 percent, closing at all-time high of 684.14. Gains by the Internet group mirrored the bullishness that pumped up the broader market.
The Dow Jones Industrial Average also closed at a record high of 9544.97.
'Growth area'
Looking at the Internet rally, Lehman Brothers analyst Brian Oakes said, "I think these are fund inflows. People are looking at the Internets as the next growth area, and they are buying that growth."
Prospects for growth in the Internet industry should in turn boost related technology industries, especially software and semiconductors.
In his quarterly update for clients, influential Merrill Lynch analyst Tom Kurlak said "the surge in Internet related business activity has been unprecedented in its rate of acceleration. The information economy is driving productivity higher, thereby helping to offset sluggishness in the older industrial economy." See Silicon Stocks.
Amazon.com (AMZN) jumped 13 1/2 to 138, past $400 a share in pre-split terms -- a level that seemed laughable just one month ago when CIBC Oppenheimer analyst Henry Blodget set the new price target, in a move that sparked the first of series of big one-day rallies in the stock. The Amazon 3-for-1 stock split took effect Tuesday.
'Don't sell AOL"
Shares of America Online (AOL) rose 1 15/16 to 148 7/8. In a note to clients Wednesday, Lehman's Oakes listed five reasons "not to sell AOL now."
"Even with the dramatic run-up in AOL's stock, we believe it could be a mistake to sell one share, given the potential catalysts we see over the next six months," he said.
For example, AOL's stock could get a boost from a cable broadband deal, Oakes said, noting that a cable company such as AtHome has a higher valuation than AOL.
Also giving net stocks a boost: Steve Harmon of www.internetnews.com delivered his top 10 Web picks of 1999. Harmon, who says his choices rose a collective 312 percent in 1998, says a fall in Internet stocks "is probably on tap soon."
Harmon taps software seller Beyond.com (BYND) and battered Preview Travel (PTVL) among his favorites. See his column. Preview at 18 or so trades "substantially off its $44 per-share high," says Harmon, who writes from Monterey, Calif. "We think travel and the Internet look attractive." See Thom Calandra's StockWatch
Internet America (GEEK) soared 63 percent to 37 after Ferris Baker Watts initiated coverage on the stock with an "accumulate" rating.
AtHome (ATHM) and AT&T (T) are in a long-term deal to create nationwide Internet Protocol access. See Internet Daily. AtHome shares rose 16 1/8 to 96 3/8 while AT&T rose 3 3/8 to 82 7/8.
Percentage gainers
Among the Internet stocks with the greatest percentage gains: Yahoo! (YHOO) shares jumped 33 1/8, or 13 percent, to 291. EBay (EBAY) surged 59, or 26 percent to 283. Shares of auctioneer Greg Manning Auctions (GMAI) surged 48 percent to 12 15/16 after it said it expects to report record second-quarter sales. Beyond.com (BYND) leaped 1 3/16 or 5 percent to 24 1/6. Books-A-Million (BAMM) also rocketed higher, jumping 1 1/2 or 12 percent, to 14 1/8.
CS First Boston initiated coverage of Lycos (LCOS) with a "buy" rating. The stock rocketed 13 5/8, or 26 percent to 66. The investment bank said the portal could attract the attention of a large media or telecom company seeking a more prominent Internet presence, Reuters reported.
Shares of CMG Information Services (CMGI) jumped 30 9/32 to 151. Raging Bull, an Internet financial website, received an undisclosed amount of funding from @Ventures, CMG's investment arm. A company press release said that the site's two model portfolios outperformed the S&P 500 Index at the end of 1998. UBid (UBID) climbed 1 3/16 to 121 1/16.
Among smaller players: Ticketmaster Online-CitySearch (TMCS) surged 11 1/8, or 24 percent, to 57 7/8. Go2net (GNET) Internet technology firm rose 6 3/4 to 45 1/8, or 18 percent. Shares of Verity (VRTY) rose 5 1/16 to 32 1/2, or 18 percent. Rocky Mountain Internet (RMII) rose 1 3/16 to 14.
In other news: MindSpring Enterprises, Inc. (MSPG) is buying ICG Communications, Inc.'s (ICGX) Netcom subsidiary for about $215 million in cash and $30 million in stock. Mindspring soared 8 9/16 to 75 1/8. Shares of ICG were down 3/16 to 22 15/16.
Under the deal, MindSpring acquires ICG's U.S. dial up, dedicated and Web-hosting accounts of Netcom. ICG will retain the network "backbone" of Netcom, which includes 236 "points of presence" serving some 700 cities, the companies said. See full story.
Among other smaller net players, Egghead.com (EGGS) rose 13/16 to 21 7/16; Online grocer PeaPod (PPOD) rose 9/16 to 7 3/4. Shares of EarthLink Network Inc. (ELNK) rose 3 5/16 to 68 15/16..."
source: © By Stephanie O'Brien, CBS MarketWatch Last Update: 5:17 PM ET Jan 6, 1999
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