Digital Island Soars as Yahoo! Struggles

TheStreet.com Internet Sector index moves up with no help from an ailing Yahoo!.
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Yahoo!

(YHOO)

was coming back down to earth today, though its landing was softened by a cushion of billions of dollars. But much of the Internet sector was still giddy.

TheStreet.com Internet Sector

index was up 18.21, or 1.7%, at 1077.08. Yahoo! wasn't faring as well, down 35, or 10%, at 313 after it was finally included in the

S&P 500

index after the close last night.

Digital Island

(ISLD)

apparently caught whatever Yahoo! had yesterday, trading up 49 3/8, or 70%, at 119. The company said today that it was teaming with

Sun Microsystems

(SUNW) - Get Report

and

Inktomi

(INKT)

. Digital Island, which provides network services for globalizing e-business applications, will deploy up to 5,000 Sun servers equipped with Inktomi's Traffic Server and content delivery suite. It will help expand the reach and capacity of Digital Island's content delivery network.

Under the agreement, Sun will also make a minority investment in Digital Island. Inktomi will also make an additional investment in Digital Island, adding to the stake it already holds in

Sandpiper Networks

, which announced a merger agreement with Digital Island in October. Inktomi was up 10 15/16, or 6.7%, at 174 1/2, while Sun was up 2 3/8, or 3.4%, at 74 1/2.

Also, Internet incubators

Internet Capital Group

(ICGE)

and

CMGI

(CMGI)

were on fire. Internet Capital Group was up 37 7/16, or 22%, at 206 3/4. The stock is set to split 2-for-1 Dec. 10; the original split date had been slated for Dec. 27. CMGI was up 9 7/16, or 5%, at 187 1/2.

Internet service provider

MindSpring Enterprises

(MSPG)

had a few announcements today. The company made news earlier in the week, when

AT&T

(T) - Get Report

said it would allow MindSpring access to its cable lines. Today, MindSpring said it signed a one-year agreement with

GoTo.com

(GOTO)

, making GoTo.com the default search engine on MindSpring's Web properties. MindSpring was up 2 1/16, or 5.7%, at 38 7/16, while GoTo.com was up 7 3/16, or 8.3%, at 93 7/8.

MindSpring also said it was teaming with

Ravisent Technologies

(RVST)

to deliver an Internet appliance that will allow consumers to access the Internet without a computer. Customers using the Ravisent product will use their TV screens to surf the Net and read and send email, among other things. Under the terms of the deal, Ravisent will offer its Internet TV appliance at a "subsidized, competitive price" to those who subscribe to two years of MindSpring's service. Ravisent was up 5 3/4, or 23%, at 30 3/4.

Also,

Amazon.com

(AMZN) - Get Report

and

Sprint PCS Group

(PCS)

said they are offering online shopping at Amazon from Internet-ready Sprint PCS phones. Amazon was up 5 15/16, or 7%, at 92 on the news.

A number of stocks were on the rise after action by analysts.

Exodus Communications

(EXDS)

was up 15 3/8, or 10.6%, at 159 7/8 in early trading after

Merrill Lynch

initiated coverage of the stock with a buy rating and a 200 price target. Analyst Henry Blodget wrote that the company was a "category-killer in Web hosting and network management solutions" and was "one of the best-positioned players to consolidate this market and rapidly move upstream into value-added services."

Also,

U.S. Bancorp Piper Jaffray

raised its rating on

ShopNow.com

(SPNW)

to strong buy from buy and issued a price target of 31. Analysts noted the upgrade was due not only to the company's strong performance, but also due to "rising per-group valuations." Piper Jaffray has done underwriting for ShopNow.com, which was up 1 5/8, or 7.6%, at 23 1/8 on the news.

Piper Jaffray also reiterated a strong buy on

Copper Mountain Networks

(CMTN)

, noting that

U S West

(USW)

was likely to deploy Copper Mountain equipment. Piper Jaffray has not done underwriting for Copper Mountain, which was up 4 7/16, or 5%, at 92 7/16.

Finally, Piper Jaffray reiterated a strong buy on

NetObjects

(NETO)

, a company for which it has done underwriting. Analysts noted that NetObjects has launched a branded

GoBizGo.com

online solutions service for small businesses. NetObjects was up 1 7/8, or 12%, at 17 9/16.