Internet investors finally saw a glimpse of sunshine Thursday as many of the stocks that have been hardest hit began mounting a rally. This came despite the fact that Merrill Lynch’s Henry Blodget late Wednesday predicted that 75 percent of the companies in the Internet sector will either be snapped up or fail.
Blodget became famous after correctly predicting Amazon.com’s stock would hit $400. Speaking to Bloomberg, Blodget said he currently favors companies in the business-to-business market, such as VerticalNet, CyberSource and Ariba.
Just before noon, internet.com’s Internet Stock Index was up 9.29, or 2.29 percent, to 414.42, the Nasdaq Composite was up 1.77 to 2,541.77 and the Dow Jones industrial average had gained 40.21 to 10,714.98. Just a half hour earlier, the Nasdaq was off almost 25 points and the Dow was off more than 8 points.
America Online Inc. (AOL) was off 2-7/16 to 85 and Microsoft Corp. (MSFT) was up 1-1/4 to 86-3/16.
The Wall Street Journal reported Thursday Microsoft is planning a low-cost or free Internet access service in a direct challenge to AOL. If MSFT mounts such an effort, it represents a huge threat to AOL’s main revenue stream. AOL generates about two-thirds of its revenue from Internet access fees paid by consumers.
GoTo.com Inc. (GOTO) was off 4-27/64 to 25-13/64. The company, which sells search listings, said its second-quarter loss increased to 46 cents compared to 16 cents a year ago.
All of the sector’s leaders have mounted a big turnaround in the past hour as institutional investors appeared to be coming back to Internets. DoubleClick (DCLK) had jumped 8-5/16 to 76 after being as low as 60-1/2, Inktomi Corp. (INKT) up 4-9/16 to 96-3/4, Real Networks Inc. (RNWK) up 3-13/16 to 64-11/16, Exodus Communications (EXDS) up 6-3/8 to 114 and eBay Inc. (EBAY) up 3-1/4 to 79.
Amazon.com Inc. (AMZN) was up 2-11/16 to 91-1/8 and CMGI Inc. (CMGI) was off 3/4 to 75-1/4 after hitting 80-1/2 earlier in the session.
It was proving to be a mixed day for IPOs. Internet Capital Group Inc. (ICGE) had vaulted 9-5/8 to 21-5/8. The venture capital firm, which has invested in about 35 e-commerce firms, sold 14.9 million shares at $12.
Cobalt Group Inc. (CBLT) was off 1-5/8 to 9-3/8. The company, which manages Web sites for car dealers, sold 4.5 million shares at $11 each.
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