Fueled by takeover speculation, Internet stocks soared in trading today, with many hitting new 52-week highs or posting percentage gains in the double digits.
The rally was led by Internet advertising company DoubleClick, which gained 14.3125--more than 28 percent--to reach 64, an all-time high, and Netscape Communications, which closed at 35.68, a leap of more than 31 percent. Other big gainers included EarthLink Network, which closed up 10.25 at 87, and @Home, which gained 6.18 to 53.50 on news it had signed contracts to provide high-speed Internet service to ten cable companies.
A number of stocks moved above their 52-week highs, including online bookseller Amazon.com, which closed up 14.41 percent at 114.12; and Internet service provider MindSpring Enterprises, which was up 5.22 percent at 108.25. Three Internet search engines also hit new highs, including Lycos, which gained 8.79 percent to reach 82; Excite, which gained 7.35 percent to reach 100.37; and Yahoo, which gained 7.86 percent to reach 169.87.
Most Internet stocks have been on an upward path for some time, but they appear to have received a further boost from comments Netscape made yesterday indicating that it was talking to major media companies about a possible partnership.
In recent weeks, a number of Internet companies have seen their stocks soar after announcing that they were teaming up with established media companies. For example, CNET's stock has more than doubled since the company announced a deal with NBC, and Infoseek has been on a steady climb since announcing a similar deal with Disney. (CNET is the publisher of NEWS.COM.)
"People are seeing Internet companies as takeover targets by large media companies because of the Netscape story yesterday," speculated Lynn Trepp, an Internet stock analyst at Waldron. She added that Netscape's announcement even is likely to help Internet companies such as online booksellers and music retailers, despite the fact that they lack the infrastructure to become so-called portal sites.
"What they all have in common is the eyeballs," said Trepp. "They have customer lists, which are valuable."
Notable exceptions to today's run-up in Internet stocks included Net retailer Shopping.com, which was down in early trading before closing unchanged, and online brokerage E*Trade, which spent most of the morning down before closing at 23.12, a gain of less than 1 percent.
Paragon Capital director of research Steve Frenkel said most Internet stocks currently are "wildly overvalued," but said they are likely to go higher nonetheless.
"They're like emotional lightening rods for the money that's going into the market now," Frenkel explained. "If people want to be a part of what they view as the future economy, they're going to buy these ten or 12 stocks."