AOL targets........AOL shares (AOL: news, msgs) lost 3/4 to 64 1/8 as its planned
acquisition of Time Warner (TWX: news, msgs) overshadowed solid
quarterly results posted after the close Wednesday. The world's biggest
Internet access provider said second-quarter net income doubled to $271
million on sales of $1.6 billion. More importantly, sales from high-margin
advertising and e-commerce shot up 79 percent to $437 million.
Those results were greeted positively by most Wall Street analysts. First
Union Securities initiated coverage with a "strong buy" rating. Donaldson,
Lufkin & Jenrette raised its rating to "strong buy" from "buy" and upped its
price target to $120. In fact, the consensus rating for AOL by the 37
analysts surveyed by First Call, is 1.4, which represents a very strong buy
recommendation.
Dain Rauscher Wessels, however, lowered its rating to "aggressive buy"
from "strong buy." Peggy Ledvina, the AOL analyst there, said she's
confident about the planned merger but expects short-term integration
challenges.
Preissler, who has a $120 12-month price target on
AOL, reiterated his "buy" rating, arguing that the
addition of Time Warner fills out any weak spots
AOL may have had. The shares are under pressure,
however, because investors are looking for
"demonstrable signs of synergies, such as
cross-promotions through their different distribution
channels."
For instance, among the first signs could be
integration of Time Warner's properties on AOL's
service or AOL start-up kits in Time Warner
magazines, he said.
Other leading Net names traded in the red as well.
Yahoo (YHOO: news, msgs), which advanced 22
7/8 to 364 on Wednesday, gave up 12 1/8 to 351
7/8.
But on the bright side, these stocks may have already
hit their lows, Preissler said.
"The Internet sector as a whole has had upswings of 100 to 150 percent,"
said the analyst. "But they also have pullbacks of some 30 to 50 percent.
If you look at the names in the sector, they're already within that pullback
range."
After the close
VeriSign (VRSN: news, msgs) ran up 13 7/8, or 7 percent, to 209. The
provider of signature authentications and other security applications for
e-commerce beat fourth-quarter estimates by 2 cents, by posting a 4-cent
profit. This compares with a loss of 3 cents a year ago, and a profit of 2
cents in the previous quarter.
Quarterly sales more than doubled to $27.7 million, up from 13 million
last year, and up from $23 million in the same quarter a year ago. For all
of '99, analysts project VeriSign to generate $84.8 million, vs. $39 million
in '98. That's expected to grow to $130 million in 2000.
Inktomi (INKT: news, msgs) gained 1 11/16 to 100. The software and
services infrastructure provider said first-quarter sales shot up 233
percent to $36.1 million, well exceeding expectations of $31 million.
Bottom-line results beat expectations as well. Inktomi reported a loss of 2
cents, compared to projections of a negative 4 cents.
ExciteAtHome (ATHM: news, msgs) gave up
1/16 to 42 3/16. ExciteAtHome confirmed after
the close Thursday that George Bell was
promoted to be chief executive, the role held by
Tom Jermoluk. Jermoluk will remain chairman.
Additionally, the provider of high-speed Internet
access posted fourth-quarter, pro forma earnings of $514,000, or
break-even on a per share basis, which was in line with analyst
expectations. Revenue surged 76 percent to $128.8 million, also matching
Wall Street projections.
The number of subscribers grew to 1.1 million at the end of 1999, up 36
percent sequentially, and three times as many subscribers in 1998.
Of note ...
Ask Jeeves (ASKJ: news, msgs), which offers a question-and-answer
search format, lost 1 3/4 to 100 1/4 after adding 6 1/16 Wednesday
following a slimmer-than-expected loss. See archived story. It also
reportedly is considering a second site to for topics unsuitable for younger
audiences. See full story.
Internet incubator CMGI (CMGI: news, msgs) fell back 1 13/16 to 120
9/16. Engage Technologies (ENGA: news, msgs), which is majority
owned by CMGI, shot up 20 9/16, or 27 percent, to 97 9/16. The
provider of profile-driven marketing offerings is buying other CMGI units
Adsmart and Flycast Communications.
Post comments about Net stocks at the Internet Discussion Group page.
Bambi Francisco is Internet editor for CBS MarketWatch.
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