With Excite being snatched up Tuesday by At Home for a whopping US$6.7 billion -- the largest-ever acquisition of an Internet outfit -- it isn't taking much brainwork on the part of investors to figure out the next likely acquisition target.
If you said Lycos (LCOS) -- bingo. The portal (and soon-to-be parent of Wired News) immediately jumped to the head of the buyout line as the rumored possibility of an Excite-Lycos merger vanished. Lycos' stock surged 28 percent to $112.63.
The broader market turned in a mixed performance much of the day before marching into positive territory just ahead of the closing bell. The Dow Jones Industrial Average gained 14.67 points to close at 9355.22, and the S&P 500 was 8.73 higher at 1251.99. A strong showing by Net and tech stocks helped the Nasdaq Composite Index soar 59.49 to a record 2407.69, and the Wired Index was up 14.50 at 619.52.
Last-minute gains notwithstanding, an air of nervousness hung over Wall Street. Brazil's well-being (or lack thereof) continued to dampen hopes for a global economic recovery, and there was the wild card of President Clinton's State of the Union speech. More importantly, Fed chief Alan Greenspan is slated to address Congress on Wednesday morning, and traders will be putting his every word under the microscope in search of clues as to interest rates.
Most Internet stocks received a boost from news of the At Home-Excite tie-up. Not least among the encouraging aspects of the deal is that neither company has yet to make a dime -- validation for all those who think that profit is hardly a factor in valuing Net firms. The sale price represents a 57-percent premium over Excite's (XCIT) $3.5 billion market value as of last Friday, which easily explains why the company's stock vaulted 63 percent to $110.
At Home (ATHM) rose 13 percent to $115.38, but AT&T (T) may be the real winner here. When it completes its purchase of Tele-Communications Inc., it will become At Home's largest shareholder, and will find its Internet resources significantly expanded. The telco was up $7.13 at $91.38.
So now the speculation turns to who's next.
"The two main portals that haven't yet picked dance partners are Yahoo and Lycos," said Shaun Andrikopoulos, an analyst with BT Alex. Brown. "Yahoo has achieved critical mass and doesn't need a partner. But Lycos could really use a relationship with a larger company."
The most likely suitors? Andrikopoulos said it's still too early to test the prevailing winds, but he wouldn't be surprised to see offers from Time Warner or News Corp. He's also looking ahead to Disney eventually taking a controlling stake in Infoseek.
Snap unveiled an accord with GTE and Bell Atlantic for the two telcos to offer a high-speed version of its own portal for users with bandwidth to spare. Snap's majority owner, CNET (CNET), jumped 37 percent to $99.75. CNET also owns News.com, which competes with Wired News.
Yahoo (YHOO) advanced $6 to $323, and Infoseek (SEEK) was $5.69 higher at $77.06. But MarketWatch.com (MKTW), which skyrocketed more than 470 percent on its first trading day last Friday, fell $1.13 to $96.38.
EBay (EBAY) was up $6.50 at $229.88. But one of the growing army of rival auction houses, Onsale (ONSL), lost $8.19 to $50.25 after warning that its fourth-quarter loss may be as high as 17 cents a share. This would only be about a penny more than anticipated by the Street, but would nevertheless be perceived as a setback in light of all the attention online auctioneers have received of late.
CDnow (CDNW) gained $1.44 to $21.81 after saying its fourth-quarter sales likely will total more than $20 million -- a sizable increase over the $7.9 million seen a year earlier and the almost $14 million logged in the third quarter. The online music retailer is now in the process of merging with rival N2K.
Microsoft (MSFT) will post its own quarterly earnings after the closing bell. Analysts were "officially" looking for the software giant to come through with profit of 59 cents a share, but the unofficial number was at least a few cents higher. Microsoft climbed $5.88 to $155.63.
International Business Machines (IBM) rose $6.56 to $191.50 as Morgan Stanley Dean Witter reiterated a "strong buy" rating for the company's stock. Intel (INTC) advanced $4 to $139.38, and Cisco Systems (CSCO) was $4.69 higher at $106.38.
Charles Schwab (SCH) gained $1 to $60.75 after reporting record quarterly profit of 26 cents a share. Much of that take came from about 93,000 online trades each and every day, accounting for 61 percent of Schwab's trading total.
Elsewhere in finance, Chase Manhattan Bank (CMB), JP Morgan (JPM), Merrill Lynch (MER), PaineWebber (PWJ) and Bear Stearns (BSC) each reported better-than-expected quarterly earnings, but their stocks were mixed amid uncertain outlooks for overseas economies. BankAmerica (BAC), meanwhile, fell 56 cents to $64 after its profit came in a couple of pennies shy of the anticipated mark.
AirTouch Communications (ATI) rose 11 percent to $92.88 as the ink dried on its $56 billion purchase by Britain's Vodafone Group (VOD), which was up $8.50 at $184.50. Bell Atlantic (BEL), the spurned suitor in this particular triangle, managed to walk away with a $4.75 hike in its share price, to $57.88.
Lastly, is the future of gaming on the Net? Sony (SNE) appears to think so, spinning off a game-design unit into a separate business. The company, RedEye Interactive, will unveil its first pay-by-subscription online game, EverQuest, in March.
Or is this just a sneaky way of getting set to cash in on the boom for Internet stocks? Whatever else, Sony's shares closed $1 higher at $70.06.
