Wall Street was cautiously higher in mid-afternoon trading Wednesday, with investors once again gearing up to test the market's upper reaches.
Lycos remained one of the busier stocks as efforts gathered steam to find the company a different buyer, and Microsoft occupied itself with bringing millions of Chinese online.
The Dow Jones Industrial Average gained 67.71 points to 9761.47, and the Wired Index was 5.82 higher at 614.35. The Nasdaq Composite Index rose 5.43 to 2398.37, and the S&P 500 was up 4.18 at 1284.02.
Say what you will about Bill Gates -- the dude's nothing if not ambitious. Visiting the Chinese city of Shenzhen, Gates said Microsoft's (MSFT) goal is nothing less than "to introduce millions and millions of people" to the Internet, and to do this he unveiled a new set-top box designed to get the Chinese online through their TVs. The boxes feature a new operating system called Venus, which combines a Chinese version of Windows CE with Internet Explorer and WebTV.
"Microsoft sees an opportunity for low-cost access to the Web," said Jean Orr, an analyst with Nutmeg Securities. "As long as they control the box, it doesn't matter whether it's the TV or the PC." China has about 320 million TV sets but a mere 11 million PCs. A scant 2 million Chinese are said to be Internet users.
So does Microsoft's push into China represent a strategic shift? Does Redmond hope that by finding a beachhead for Windows CE in the vast Chinese consumer market, it will gain an edge over rival operating systems for the next generation of smart appliances?
Orr doesn't think so. Since China is anything but a technology leader, she feels it would be a stretch for the country to serve as standard-bearer for the rest of the world. "But they have so many people," Orr noted, "it's an important market in its own right."
Still, Microsoft's stock slipped US$1 to $160.81 as traders weighed the company's China initiative against uncertain prospects for settlement of the government's antitrust charges against the software giant. Conflicting reports are circulating as to whether Redmond and the Feds are indeed discussing a compromise.
Meanwhile, Lycos (LCOS) surged 14 percent to $109.53 after venture-capital firm CMGI, the portal's biggest shareholder, said it had hired Morgan Stanley Dean Witter to hunt down other buyers for the company. CMGI is challenging Lycos' pending merger with USA Networks, which it says places an "inadequate" premium on the portal's value.
Separately, Lycos, soon-to-be parent of Wired News, signed a $52.5 million contract with WebMD to develop a co-branded health care channel and cooperate on e-commerce and marketing efforts. However, the deal -- Lycos' largest to date -- includes making use of USA Networks' TV assets, so it remains to be seen how this will all play out.
Among other Net notables, Amazon.com (AMZN), Yahoo (YHOO) and America Online (AOL) each gained ground after analyst Henry Blodget settled into a new job at Merrill Lynch by advising the broker's clients to buy the three stocks. Blodget's the guy who previously scored some major Street cred by accurately predicting Amazon reaching $400 a share (although some might say his unusually rosy forecast played a big role in the stock's meteoric rise).
Left out in the cold was online auctioneer eBay (EBAY), which fell $7.75 to $158.50 as Spencer Clarke LP initiated coverage of the company with a "sell" rating. Ouch.
