Hollywood Entertainment Corp.
Dow Jones Newswires -- February 11, 1999
Hollywood Entertain Up 21%; Analyst Cites Web Stocks' Rise
By Tom Locke
DENVER (Dow Jones)--Hollywood Entertainment Corp. (HLYW) shares rose more than 21% Thursday, and one analyst said the rise was part of an upsurge in Internet stocks.
Black & Co. analyst Jennifer Jordan said that since Hollywood Entertainment became part of a new electronic-commerce index, it has started to trade more like an Internet stock.
Hollywood Entertainment is one of 15 companies on The Street.com E-Commerce Index (ICX), which recently began listing on the American Stock Exchange. The index options will be traded by the Nasdaq-Amex Market Group starting Feb. 17.
The index, which includes companies such as Amazon.com Inc. (AMZN) and eBay Inc. (EBAY), was recently up 8.4%.
Jordan noted that Hollywood Entertainment, a Portland, Ore., operator of a chain of video rental superstores, is included in the e-commerce index because of its 1998 purchase of Reel.com, an online seller of videos.
However, Hollywood Entertainment gets the vast majority of its revenue from its video stores, she said.
NationsBanc Montgomery Securities Inc. analyst Douglas Gordon also cited the upsurge in Internet stocks Thursday as a reason for Hollywood Entertainment's rise.
Many Internet stocks rose as the biggest shareholder of Lycos Inc. (LCOS), CMG Information Services Inc. (CMGI), said it won't support a merger with USA Networks Inc. (USAI). Lycos' announcement earlier this week that it agreed to be acquired by Barry Diller's cable network caused shares of the Internet directory company to decline -- and pressured other Internet names -- because investors felt the deal undervalued Lycos, a bellwether Internet stock.
Gordon noted that Hollywood Entertainment's fundamentals are strong. He said he expects fourth-quarter same-store sales will be up 18%, compared with 7% in the third quarter. He is also expecting 18% same-store sales increases in the first half of 1999.
Hollywood Entertainment's chief financial officer wasn't immediately available for comment.
Hollywood Entertainment shares rose 5 3/8, or 20.5%, to 31 5/8 on Nasdaq volume of 1 million, compared with average daily volume of 528,900.
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