Why You Can Trust CNET Partners ride high on AOL coattails
The "trickle-down" effect of Microsoft's success to its partners is well-documented. The same is now true for firms working with AOL.
Marking the latest example of an AOL benefactor, shares of Market Guide leaped more than 180 percent--one day after striking a deal with AOL to provide financial data to its Web site. The stock was up 15.06 to close at 23. The shares have traded as high as 8.875 and as low as 1.75 during the past 52 weeks.
Yesterday, company chief executive Homi Byramji announced the AOL alliance by saying: "Through this new relationship, Market Guide's information will be available to AOL's more than 12 million members."
AOL's brand recognition on the Net, its dominance as the No. 1 online service, and the run-up in its stock price all are contributing factors to this "coattail" effect, analysts said. AOL's partners deserve some credit, too, because the online service likes their products well enough to team up with them.
In another instance of the coattail effect, search engine and caching software provider Inktomi filed to go public a day after announcing a caching agreement with AOL. Under the terms of the deal, AOL agreed to license Inktomi's network cache software, dubbed Traffic Server. It will be used as part of AOL's Web service.
The deal is a coup for Inktomi, which prominently listed AOL as a business partner in its public offering filing. As reported, Inktomi plans to offer a 10 percent stake in the company at a maximum offering price of $35.42 million. It expects to trade under the symbol "INKT."
The company faces intense competition, but striking partnerships with companies such as AOL, Microsoft, Intel, and Digital will provide a boost, analysts said.
Preview Travel is another AOL business partner that is riding high. It operates the primary ticketing service on America Online and AOL.com, as well as on Excite, Lycos, and its own Web site.
The company went public only last November at $11 a share. Its stock closed today at 32.31, down 0.81. Preview has appreciated more than 225 percent this year alone, making it one of the fastest-growing Internet stocks.
According to a recent study by Digital Video Investments, Preview Travel was the largest gaining Internet stock in 1998--ahead of Yahoo, Amazon.com--and even AOL.
As reported, Preview Travel announced plans earlier this month to float more shares. The total number of shares being offered was increased to 3.5 million.