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Net companies rival media giants

Wall Street is valuing some Internet firms, like Yahoo and AOL, as though they are pillars of American industry.

Are Net companies such as Yahoo and America Online destined to become 21st-century media giants, alongside television networks such as ABC and print media companies like Gannett?

That's still debatable, even with the much-hyped convergence of PCs and TVs. But Wall Street is valuing some Internet companies as though they are pillars of American industry--at least those companies that can turn a profit and lead in their respective markets.

Yesterday's nearly 18 percent runup in Yahoo's stock to a record $114.50 per share, as reported, now gives it a market value of more than $5.2 billion. AOL's market cap, meanwhile, stands at almost $15.5 billion.

According to Bloomberg, Yahoo's market value now exceeds more than one-third of the companies in Standard & Poor's 500 index. Its market cap has surpassed that of Apple Computer, Black & Decker, and Maytag.

Even among media companies, Yahoo stands out, at least by this measure. Its market value exceeds that of print media chains such as Knight-Ridder and nears that of Times Mirror.

As for AOL, its market cap has surpassed Tribune Company and is knocking at the door of Gannett, which has 87 daily newspapers and 27 TV stations, and whose origins date back to 1906.

AOL and Yahoo are valued at these prices even though they have less revenue, are less profitable, and are much younger than their print and broadcasting counterparts.

Many longtime Wall Street watchers are stunned at the sharp runup in Net stocks, and even the companies can't keep track. A link on Yahoo's Web site shows the company's stock trading at only $73.25 per share with a market value of $3.2 billion--last updated on March 2.

Many analysts wonder if the trend can be sustained because of cutthroat competition. In addition, traditional media companies aren't standing still. They are migrating to the Web with their well-known brands and deep pockets.

Still others think the prices of Net stocks are justified because of the medium's huge potential. Some even argue that the stocks are undervalued.

Either way, following the stock's gyrations would keep the Maytag repair man busy.