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Internet Stocks Reap Rewards From AOL Merger

But America Online's stock isn't benefiting much from the announcement in early trading.

Today's announced

America Online



Time Warner


merger was reverberating throughout the Internet sector. Internet Sector

index was up 48.98, or 4.5%, at 1133.87 in recent trading on the heels of the announcement, after trading as high as 1157.93. AOL was only up 3 points, or 4%, at 76 3/4. AOL is being viewed as the purchaser, one reason it wasn't benefiting more. AOL shareholders will receive one share of stock in the new company for each AOL share they hold, while Time Warner shareholders will receive 1.5 shares of the new stock. When the merger is complete, America Online's shareholders will own 55% and Time Warner's shareholders will own 45% of the new company. However,


analysts said that the new company would be valued at roughly $90 a share, and put a 90 price target on AOL. Time Warner was up 31 1/4, or 48%, at 96. PaineWebber put a value of $135 on its stock, maintaining a buy rating up to 130.



, which is also viewed as a potential partner for a large traditional media company, was up 37 1/4, or 9%, at 444 1/2. Yahoo!'s gains also come a day ahead of its earnings report. It's expected to report earnings of 15 cents a share, according to

First Call/Thomson Financial

, though


lists a whisper number of 20 cents a share. Hopes that the company will announce a split along with its earnings report have also been supporting the stock.

Net portals and other ISPs also were on the rise.



, whose merger with

USA Networks

(USAI) - Get Report


canceled back in May, was up 5 7/8, or 8%, at 77.


(ATHM) - Get Report

was up 1 3/4, or 4.5%, at 40 5/8.

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, an ISP that's merging with



, was up 2 15/16, or 7%, at 44. MindSpring was up 1 3/4, or 6.7%, at 27 13/16.

Elsewhere, one of the few Net stocks not participating in the rally was

Internet Capital Group


was down 10 3/4, or 6%, at 163. The Internet incubator was blasted in


over the weekend in an article that looked closely at the company's valuation.


was up 9/16, or 1%, at 57 5/8 on news of a pact with



, which will allow customers to create their own customized credit cards. Brian Ek, vice president of communications for priceline, told


that users will be able to customize their cards regarding interest rates, credit limits and loyalty programs they belong to. Ek said if a customer requests a certain interest rate, it could be denied, but the service would possibly come up with an alternative rate for the card. Ek said priceline will receive fees for the cards that are applied for.

Finally, a couple of stocks were rising due to split fever.



, which splits after the close Tuesday, was up 21, or 7.6%, at 296.

Red Hat


, whose shares were trading on a postsplit basis as of today, was up 11 13/16, or 8.9%, at 144 1/16. And



, which splits after the close of trading today, was up 11 5/8, or 4.9%, at 248.