Internet stocks surged today on renewed speculation that they may become the prey of telecommunications carriers and "old media" companies.
The catalyst behind the run-up was a report by London's Financial Times that AT&T had made an offer for America Online that was "comfortably above" AOL's $19 billion market value--but that the offer was spurned. Neither company would confirm the report, but that didn't stop Net stocks from taking off.
Yahoo rose 8.6875 to close at 130.625; Excite jumped 8.8125 to close at 76.125; Infoseek climbed 1.375 to finish at 34.5; Lycos was up 2.75 to close at 59.5; and CNET leaped 10.5 to end at 56. (CNET: The Computer Network publishes NEWS.COM).
Analysts long have speculated that telcos and print or broadcast media giants might want to forge alliances or buy out Net companies to expand their reach into cyberspace. In recent days, for example, Infoseek's stock has surged on buyout rumors. Disney and Time Warner have been named as possible candidates.
Telcos like AT&T, with deep pockets and big brand names, are at the forefront of the rumor mongering. Despite word that AOL may have spurned AT&T's offer, analysts remain bullish that an alliance between AT&T and a Net company eventually will be forged.
They also see CBS as pursuing an Internet company. Its rival broadcasting rivals already are forging deals. Disney, which owns ABC, recently exercised its option to buy the rest of Starwave, and NBC and CNET forged an alliance last week.