AOL Leading Internet Access Stocks Lower
For a lot of AOL shareholders, all is not A-OK.
America Online Inc. shares skidded $3.19 on Monday to close at $82.81 on the NYSE, crashing through their recent lows of early August. The stock is now down by more than half from its April peak of $175.50, and its once-heady year-to-date gain has shriveled to 7%.
Net stocks in general have rallied from their early-August lows, and many of the sector’s leaders--including EBay Inc. and Amazon.com--have held on to those gains.
But AOL began sliding again in late August. Monday’s close was the lowest since Feb. 19.
Some investors clearly are increasingly nervous about the competitive threat to the leading Internet service provider from such tech titans as AT&T; and Microsoft and from “free” Net service providers such as NetZero.
Brokerages such as DLJ Securities have recently reiterated their “buy” ratings on AOL. And last week the company said it expects to meet analysts’ estimates for third-quarter earnings and subscriber growth.
But Wall Street seems to be tuning out the bulls on most Net access stocks. Indeed, smaller AOL rivals haven’t fared much better lately:
* MindSpring Enterprises (ticker symbol: MSPG), which added 38 cents on Monday to close at $27.50 on Nasdaq, is well off its April high of $66.50 and down from $32.56 in mid-August.
* EarthLink Network (ELNK), which slid 63 cents to close at $39.50 on Nasdaq, is way off its April peak of $99.38 and has tumbled from $50.38 in late August.
* Prodigy Communications (PRGY), which went public at $15 in early February and quickly spurted to $49, eased 19 cents Monday to close at $16.44 on Nasdaq. It has fallen from $21.75 in late August.
In an announcement Monday that underscored the pressure on fee-based Net access companies, Beverly Hills-based discount brokerage J.B. Oxford Holdings said it launched a service that offers free Internet access to clients who keep at least $2,000 cash in their accounts.
J.B. Oxford is the first financial services firm to offer free unlimited Internet access as a lure for opening an account. More typical are deals like those advertised by personal computer makers and retailers such as CompUSA Inc., which offer product rebates to customers who sign up for paid Internet services.
J.B. Oxford customers using the Internet service, called npower, must open interest-bearing checking accounts, which provide free cash machine cards and allow customers to place stock trades and get free Internet access. The company will charge customers whose cash balances fall below $2,000 a monthly fee of $15.95 for Web access.
J.B. Oxford’s volatile stock rallied $1.06 to close at $8.50 on Nasdaq. The shares have swung from a low of 44 cents to a high of $25.75 in the last 52 weeks.
