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Internet Shares Rise on Ad Market Hopes

Some Internet juggernauts made waves on Wall Street Thursday. With no specific news provoking the buying, experts guessed that investors are looking ahead to the recovery of the advertising market.

"I don't know specifically why Yahoo! (YHOO - Get Report) is up two bucks today," said Peter Boockvar, equity strategist at Miller Tabak. "But I'm guessing it's perhaps the sense that maybe advertising on the Internet is improving."

Shares of Yahoo! $18.95, up 11%, though far below their 52-week high of $43.38. Web advertiser DoubleClick (DCLK) closed up 11% to $11.13. And online retailer Amazon.com (AMZN - Get Report) gained 2.9% to $12.10. Meanwhile, Internet software provider Inktomi (INKT) gained 13.6% to $6.61, and rival Akamai Technologies (AKAM) rose 2.3% to $6.21.

The erstwhile high-fliers are all sharply off their highs but have at least demonstrated some survivor's instinct in the face of disappearing revenues. Could their recent strength signal a turnaround for the ad market?

Yes, said Kathleen Heaney, analyst at Brean Murray & Co., who covers Yahoo!. "These companies are leading indicators" for the ad market, Heaney said. "If people think the worst is behind them, then you'd want to come in when earnings are at their bad point."

Heaney said she did not see any news that could have driven Thursday's buying of stocks like Yahoo! and DoubleClick, but noted that it could be the trickle-down effect from the two media conferences taking place in New York this week. The companies aren't participating in the conferences.

"Advertisers are presenting and I think the picture coming out wasn't that gloomy, and that it's almost like the worst is behind us," Heaney said. "So if you start looking around and say, 'OK, advertising has probably bottomed and can get better; who can benefit but a Yahoo, or something like that?'"

With over 200 million customers, Yahoo! will be one of the firstbeneficiaries of any recovery of the ad market, said Heaney, who has a long-term strong buy on the company. Her firm hasn't done any underwriting for Yahoo!.

"I believe in its advertising model and I accept that advertising will always be the biggest chunk of their revenue," Heaney said. "But they will have other revenue streams coming in."

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