Deals, Deals, Deals

In the big picture ISDEX rises 7.67 points or 1.39% to 559.09 on the heels of a NASDAQ record-setting move. The real news is deals, deals, everywhere deals drive valuations more and more as consolidation fever takes hold.

Today’s dance fever includes ONSALE (NASDAQ:ONSL) agreeing to acquire rival Egghead (NASDAQLEGGS) in a stock swap, Terms: ONSL will issue .565 shares on common for each EGGS common.

Pro forma each firm will own roughly half the new larger auction and etailer effort. Reason for the marriage? the two etailers need to bulk up to fight the war on three fronts: 1) sales (combined will be about $500m); 2) brand (forward going will be known as; 3) Amazon is moving into tech products as are others.

While both ONSL and EGGS stocks dropped today I think the merger makes sense based on the 3 above items.

A fourth move that makes even more sense to me is for a (NASDAQ:BNBN) to realize that the only way they can compete with Amazon is to acquire the new

Ironically, the deal may have boosted shares of etailer Cyberian Outpost (NASDAQ:COOL), which pops 14% to $11 7/8 per share on expectations of deal fever finding it soon.

  • Sportsline (NASDAQ:SPLN) revamps its Web site and continues a slow ascent, gains 7% to $39 7/8 today. Another candidate for consolidation?

  • Inktomi (NASDAQ:INKT) beats the Street with a narrower-than-expected loss before acquisition charges — $0.10 loss per share vs. First Call’s $0.12 loss prediction. Revenue jumps to $19.6 million vs. $6.3 million. INKT is one to own in my view, an infrastructure play with its cache software and search engine wholesaling. INKT shares rally $3 5/16 to $128 7/8 close.

  • EarthLink (NASDAQ:ELNK) posts $0.21 loss per share for 2Q, a penny better than the $0.22 loss per share forecast. Revenue jumps to $78 million vs. $37.9 million 2Q98. With its 1.4 million subscribers. PC maker Gateway (NYSE:GTW) was rumored a week ago to be interested in acquiring EarthLink. The deal makes sense, combining the box with the reason for the box: the Internet.

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