AOL considers AT&T partnership, rises on analyst talk

America Online (NYSE: AOL) shares were up 9 percent Thursday after chairman Steve Case said the company was considering a partnership with AT&T (NYSE: T), and the stock was reiterated as a "strong buy."

Shares in the company have fallen about 24 percent since it announced a merger with Time Warner Inc. (NYSE:TWX). The deal has to pass Washington's scrutiny of open-access issues, as well as Wall Street's approval.

AOL shares were up 4 7/8 to 58 3/4 Thursday. Time Warner shares were up 5 11/16 to 85, and AT&T shares were down 3/8 to 52 5/8.

Credit Suisse First Boston analyst Lise Buyer repeated her rating of "strong buy" for the Internet service provider Thursday.

"Shares of AOL could support a value of $88 even without the pending merger," she stated in a report. "We remain convinced that AOL's ... fundamentals are very robust with continuing strong subscriber growth at the $21.95 price point."

An article by Bloomberg News Thursday quoted Case as saying "We're having discussions with AT&T. There's a variety of things we could do together."

The move follows AT&T and Time Warner's Wednesday announcement they will together begin to offer cable TV and phone services to customers in upstate New York. AT&T has been talking with Time Warner since early last year about selling phone service over its cable lines.

Case didn't offer a timeframe, or elaborate on the type of partnership the two companies are discussing, according to the article.

After speculations that European media company Bertelsmann AG might drop some joint ventures after the AOL Time Warner merger, Case also AOL has been talking to Bertelsmann about "how to work together in the future."

-- Reuters contributed to this report.