AOL Stock Switches On After TV Plans, Upgrade
NEW YORK (Reuters) - Shares of America Online Inc. (NYSE:AOL - news) turned Tuesday, after the online media network unveiled Web television plans and an influential Wall Street analyst upgraded the stock.
AOL was up over 7 percent or $9.25 at $137.56 on more than 8 million shares traded by midday Tuesday. The stock was trading over 16 percent higher than its Friday close of $118.19. Shares of AOL fell in late April and early May as AT&T Corp. (NYSE:T - news) emerged victorious in the struggle to acquire high-speed Internet access provider MediaOne Group Inc.
AOL has been looking for partners to help it deliver high-speed Internet services. Although it did not announce a broadband partner Tuesday, it unveiled a strategy to get the Internet into U.S. living rooms.
Before the New York market opened the Dulles, Va. company said it had entered partnerships to develop Web-based, digital satellite television with Hughes Electronics Corp.'s DirecTV, Hughes Network Systems, Philips Electronics NV, Oracle Corp. (Nasdaq:ORCL - news)'s Network Computer Inc. and National Semiconductor Corp. (NYSE:NSM - news).
The stock received a further boost after Morgan Stanley analyst Mary Meeker upgraded it to strong buy from outperform.
Meeker said a combination of branded products, 17 million subscribers and high-speed access opportunities suggest "AOL's fundamentals are strong."
The view was reinforced by Jeffries & Co Inc.,which initiated AOL at a buy rating. Jeffries analysts Bruce Smith and Constance Cocroft said AOL has a strong revenue machine built into its Internet service business, but the company's potential for advertising and electronic commerce revenues is its "hidden gem."
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