Publish date:

Yahoo!-eBay Relationship Still Unclear

Is this a fling or a commitment? Also, Exodus standing firm in the face of Qwest, IBM union.

Will they or won't they? No, we're not talking about whether

OPEC

leaders will lower oil prices or whether

Joanie will marry Chachi. Rather, the more burning question in the Internet world: Will

Yahoo!

(YHOO)

and

eBay

(EBAY) - Get Report

form some kind of alliance or merger?

In recent trading Monday, eBay was down 3 23/32, or 1.5%, at 240 1/32, while Yahoo! was up 7 5/8, or 4%, at 201 5/8. Yahoo was benefiting from news that its mobile-phone clients in the UK and Ireland using Wireless Applications Protocol phones could access Yahoo! from their handsets, according to

Reuters

.

In a note on the eBay-Yahoo! reports, Mark Rowen, analyst with

Prudential Securities

, basically dismissed talk of a full-blown merger between the two Net superpowers, pointing to Yahoo!'s acquisition last week of

Arthas

, a provider of Web-based person-to-person electronic commerce payment services. Rowen pointed out that such an acquisition was "odd" if Yahoo! was about to acquire eBay, which has launched competing payment system

Billpoint

.

Rowen said there would more likely be some type of strategic marketing alliance between the two companies, similar to what eBay has with

America Online

(AOL)

, though Rowen told

TSC

that that alliance could even limit how far a Yahoo-eBay alliance could go. Last August, eBay and AOL launched a co-branded site across AOL's products, though the two companies have had an alliance since 1997.

TheStreet Recommends

Rowen said that a deal with Yahoo! would be good for eBay in international markets.

Shares of eBay have run up sharply since news of a potential alliance was reported by

CNBC

earlier this

month. And while Rowen would not be cornered into saying that eBay would fall if it does anything less than a merger with Yahoo!, he did acknowledge that some people would be disappointed, though his company is "not one of them." He said that regardless of a deal, he liked eBay as a stand-alone company. Prudential Securities has not done underwriting for either eBay or Yahoo!.

Separately,

Pacific Crest Securities

published its weekly listings numbers for some of the online auctioneers. Analyst Steve Weinstein reported that as of March 24, eBay had 4.4 million listings, down 52,840, or 1.2% from the previous week. eBay still had 91% of the market share for online auctions. Yahoo! cornered 8% and

Amazon.com

(AMZN) - Get Report

took the remaining 1%.

No Exodus From Exodus

Elsewhere, shares of

Exodus

(EXDS)

were not being hurt by

news that

Qwest

(Q)

and

IBM

(IBM) - Get Report

were forming a $5 billion venture to build 28 Web hosting centers within the next three years. The centers are being built to meet the growing demand for Internet business transactions.

According to one research analyst, the new initiative should not have significant impact on Exodus. Ulric Weil, analyst with

Friedman Billings Ramsey

, said the market was huge and there was enough business for a couple of companies, and Exodus should not lose its dominant Web hosting position.

"While it looks powerful on paper and it looks like they'll aggressively go after that market, it's hard for me to think Exodus will lose that dominant position. I just don't see it happening," said Weil. "On paper, it looks like there may be a serious challenge to an Exodus. How it plays out is another thing."

Monday, Exodus was up 1 5/16, or 0.8%, at 174 5/8 after trading as low as 167 1/4. Friedman Billings Ramsey has not done underwriting for Exodus.