Rumors of a takeover, along with pending announcements and recent better-than-expected results by a competitor, pushed Infoseek's (SEEK) stock up another 12 percent today--bringing this month's gains to over 50 percent.
Infoseek stock ended the day at 13-3/4, up 1-1/2 from Friday's close. This followed a 20 percent gain on Friday, bringing the two-day gain to about 34 percent.
Today's gain also follows a run in which the stock has soared over 200 percent since late August, when the stock bottomed out at less than 5 a share.
Andrea Williams, an analyst at Volpe Brown Whelan, said takeover rumors have been floating around the company for a couple of weeks, and potential candidates are said to include CNET: The Computer Network (CNWK) and Time Warner (TWX).
"Infoseek was certainly the cheapest and best value [a couple of months ago], but now it isn't so cheap," said Williams. "I would not be surprised if a year from now we saw some consolidation and potential buyers would be media companies."
Buying up a Infoseek would provide an instant path to prime distribution space, but the recent stock jump makes it less attractive of a deal, she said.
But Shelby Bonnie, CNET's chief financial officer, said that there is no truth to the rumors. And a spokesman for Time Warner declined to comment on the speculation.
Keith Benjamin, managing director at Robertson Stephens, agreed that the rumors are just that--speculation.
"It is elusive to me who would buy Infoseek and what value it would be to someone," Benjamin said. "They have some value, but I have a tough time justifying their value based on current market share."
He added, however, that a current report said Infoseek had a higher market share in the business arena than he expected. Nevertheless, Benjamin questioned who a prospective buyer would be. He doubted competitors like Excite (XCIT) or Lycos (LCOS) would be interested, saying they likely would prefer spending money on deals with Netscape Communications (NSCP) or America Online (AOL).
Other recent issues contributing to the stock's movement is a sense among investors that possible new deals and partnerships, as well as better-than-expected results, soon will be announced. Infoseek has been extremely quiet in this area while competitors have been inking deals.
But things are about to change.
David Hawk, an Infoseek spokesman, said he could not comment on the nature of the upcoming statements, but said the company will be making some announcements as early as next week.
It is a bit like follow the leader, Williams said. There have been a number of commerce deals among the other navigational companies, such as Amazon.com's (AMZN) partnership with Yahoo (YHOO), Excite, and AOL.
"If one announces a partner, then others will announce similar partnerships," Williams said. "In this area, demand exceeds supply. There are only a few places [on the Internet] where you can go to get that kind of traffic."
Advertisers realize that if you want to play in this space, you need to spread your money around a bit, Williams added. "All are growing, there is not a lot of overlap, and they are relatively inexpensive to advertise on."
And if history repeats itself, Yahoo's better-than-expected results could be the beginning of another run in the search sector. Last week, for example, Yahoo beat expectations for its most recent quarter.
"Yahoo reported better-than-expected numbers last quarter, and Yahoo reported better-than-expected numbers again this quarter, and others will as well," said Williams.
Yahoo said new programming and distribution deals, along with more advertisers and higher CPMs, all contributed to its positive financial results. Advertisers are sprinkling their money over two or three of the companies, Williams said, so expect good news from the bunch.