Internet Stocks Catch Fire Again
Internet mania is raging again.
Amazon.com, Yahoo and other Net-related shares surged Wednesday on optimism that the Internet is becoming a mass market business as record numbers of users have visited Web sites to read about the Clinton-Lewinsky scandal.
Amazon.com soared $16.94, or 19%, to $105.13, Yahoo jumped $14.94, or 15%, to $117.88, Broadcast.com rose $5.63 to $56.50 and Excite leaped $9.38 to $37.75.
Consumers have rushed to the Internet to peruse the Starr report, view President Clinton’s video testimony on sites such as Broadcast.com and buy copies of the videos sold by No. 1 online bookseller Amazon.com. Internet shares also surged on Wednesday’s news that two leading navigation services, Yahoo and Excite, signed alliances to expand their reach among consumers.
“That’s a potential boon and cause for a lot of excitement. A lot of people are coming to the Internet for the first time” to see the Starr report, said Jupiter Communications senior analyst Patrick Keane.
AT&T; Corp., the largest U.S. phone company, said it added Internet access to the list of phone services it sells on No. 1 Net search directory Yahoo’s Web site. It also said buyers of Dell Computer Corp. machines will be offered Internet access through AT&T.; Terms weren’t disclosed.
No. 2 search service Excite said it will be directly linked to customers who buy new Dell computers. After logging on, users will see a free trial offer for AT&T; Internet access, then will be taken directly to an Excite Internet site.
These and other distribution agreements show that partnerships with large computer and telecommunications companies are expanding Yahoo, Excite and other Internet companies’ reach among consumers. Many investors and analysts expect the companies to boost revenue from these agreements.
“A lot of these stocks have been beaten down. You’ve had so much volatility in this area that when you get some good news, everyone plows back into these stocks,” said Alan Loewenstein, an assistant portfolio manager at the John Hancock Technology Fund, which owns shares in Excite and other technology companies.
Investors like these stocks because, despite their volatility, they have little exposure to the Asian financial crisis and they’ve seen rapid growth in their business. Though many of the companies are still losing money, the shares carry far higher valuations than the broad market based on perceptions of almost limitless revenue potential.
