Shares in online music seller
more than doubled Friday on news that wasn't really news at all.
The company released a statement Friday afternoon that it would announce a merger partner by the end of June. The news had already been hinted at in a conference call with analysts following the release of its first-quarter earnings on May 2. Still, CDNow's shares immediately soared to finish up 2 9/16, or 111%, at 4 7/8 .
"It is a complete regurgitation of what they said before," said Lauren Levitan, an analyst at
in San Francisco who follows CDNow. Levitan rates CDNow market performer, which is similar to the hold rating that other brokerages use, and her company has not performed any underwriting for CDNow. "I'm not sure what motivated it, or why it drove up the price. It clearly was information that was out there."
Asked about the company's statement, Deborah Vondran, a CDNow spokeswoman, said "We have been saying that for awhile." She, however, wouldn't elaborate on the purpose of the release.
Any impeding deal comes on the heels of a failed
merger earlier this year between CDNow and
, the music club owned by
, which sent CDNow's shares plummeting.
The company is working with investment bankers from
Allen & Co.
Deutsche Bank Alex Brown
, and has narrowed a list of more than two dozen potential partners that expressed interest, according to the statement.
CDNow has impressive traffic figures -- it averages 4.7 million unique users a month -- but is in dire need of cash, according to Jason Leigh, an analyst at
Raymond James & Associates
. Leigh follows the online music business but does not cover CDNow. One of the companies he does cover,
, has been mentioned in the past as a possible partner for CDNOW.
"Clearly, I have no concrete information, but my reflex reaction is that EMusic does not have enough money," Leigh said. "But I don't think you can categorically rule it out."
A spokeswoman for
, another online music seller that market watchers have suggested is a possible merger candidate, said the company is not in negotiations with CDNow.