Analysts' Optimism Aids AOL

Two analyst reports allayed some worries about the company and its relationship to the AT&T deal.
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SAN FRANCISCO -- America Online (AOL) is struggling to surface from the mire. After initially extending losses from Thursday, the stock has tagged along with other tech stocks, which have pushed higher throughout the day. AOL was trading down 5/8 to 119 1/8 at midday, rebounding from an earlier intraday low of 115 3/16.

AOL has been losing steam ever since

AT&T

(T) - Get Report

won the bidding war for

MediaOne

(UMG)

. In his weekly Web report,

BancBoston Robertson Stephens

analyst Keith Benjamin addressed some concerns arising from the fallout of that deal. He believes that "AOL's customers will remain loyal, allowing it the time to negotiate alternative broadband arrangements, as it has started with telephone companies." He added that AT&T's cable competitors may even be "more inclined to do a deal with AOL to help balance power." Though he remains positive on AOL, Benjamin wrote that he does not see any near-term positive catalysts for the stock. BancBoston has done underwriting for AOL.

Also,

Merrill Lynch

analyst Henry Blodget wrote that AOL's "competitive position is basically as strong as it was last week" before the AT&T agreement and "it will be years before we know what the precise financial impact" of the deal is. Blodget also noted that AOL's investor day is May 19, and he expects the company to devote time to explaining "its vision of the broadband world," which could help allay market concerns. Merrill Lynch has also done underwriting for AOL.

In the News

Shares of

GoodNoise

(GDNO)

were up sharply today. The company was featured in a

TSC

piece last night. It was up 4 1/4, or 23%, at 22 3/4.

Also,

PairGain Technologies

(PAIR)

, best known for the

fabricated news story of its acquisition, was up strong today.

SG Cowen

issued a note on the company, touted its potential to be seen as an "inexpensive way of playing DSL" (digital subscriber line), and noted possible benefits from expected business agreements concerning its Avidia product. PairGain was up 2, or 15.5%, at 14 7/8.

IPO Activity

Concluding what has been a very busy week for Internet IPOs, three more companies have gone public today.

Media Metrix

(MMXI:Nasdaq), which measures Internet usage, was the best performer, up 23 5/8, or 139%, at 40 5/8. Also,

NetObjects

(NETO:Nasdaq), a Web site-building software provider, was up 2 5/8, or 22%, at 14 5/8, while

AdForce

(ADFC:Nasdaq), a provider of Internet-based ad services, was up 17, or 113%, at 32.