IBM -- the New Internet Player

CMGI and Gateway team up and Lycos still rocks.
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SAN FRANCISCO -- Some are talking up IBM (IBM) - Get Report as an Internet play, and with moves like today's 15-point gain, it's no wonder. And the stock's strength is moving actual Internet plays.

CMGI

(CMGI)

, which invests in Internet companies, has entered into a strategic alliance with

Gateway

(GTW)

. Gateway will invest $200 million for an ownership stake in CMGI, joining

Microsoft

(MSFT) - Get Report

and

Intel

(INTC) - Get Report

, which hold minority positions in the company. Gateway and CMGI will seek out collaborative business and investment opportunities on the Internet.

CMGI was trading up 2 1/8, or 1%, at 241 7/8.

Shares of

Lycos

(LCOS)

continue to flourish following Wednesday's confirmation that its merger with

USA Networks

(USAI) - Get Report

was off. The general feeling is that Lycos remains a potential buyout candidate, but at a higher price than USA was going to pay. Lycos was up 3 4/3, or 3.5%, at 110 3/4.

Lycos also is getting help today from an upgrade by

Jefferies & Company

, which raised Lycos to buy from hold with a price target of 150. Jefferies speculates that

Time Warner

(TWX)

is a potential candidate with Internet assets to do a deal with Lycos, similar to those done by

NBC

and

Xoom.com

(XMCM)

and

Disney

(DIS) - Get Report

and

Infoseek

(SEEK)

. However, they note, they do not expect any "big" Lycos deals to be announced soon as Lycos has agreed to pay USA a $35 million breakup fee if it announces a deal before July 15.

On the IPO front, shares of

Copper Mountain Networks

(CMTN:Nasdaq), a DSL-based Web access component maker, have surged in its first hour of trade. Copper Mountain Networks was up 49, or 233%, at 70, soon after it began trading. (See

In the Fifth Week, PairGain Rises Again for more on Copper Mountain and digital subscriber line technology.)

Daily Dose of Fiber

Fiber-optic component suppliers are on a tear, although one company is sitting out the party.

Uniphase

(UNPH)

shares have climbed 3 to 145 3/8 today and are up 15% since Monday. On Wednesday Uniphase said Canadian regulators have cleared its merger with

JDS Fitel

. Its peer

SDL

(SDLI)

is up 2 to 125 today, and up 13% since Monday.

Then there is the upstart

E-Tek

(ETEK)

, whose stock is down 1 1/2 to 41 1/2 for the day and down 15% since Monday. One possible reason: Insiders are unloading stock. According to filings with the

Securities and Exchange Commission

, Chairman Michael Fitzpatrick sold 350,000 shares on April 26, reducing his stake to roughly 2.5 million shares.

A prior

story in

TSC

described the high-octane sales of optical components to network systems companies such as

Lucent

(LU)

and

Ciena

(CIEN) - Get Report

.

Kevin Petrie

Ramming Along

Shares of

Rambus

(RMBS) - Get Report

are up for the sixth straight session. The stock may be seeing a short squeeze as investors await indications on whether Intel will roll out its Rambus-based chipsets in September. It was up 3 19/32, or 5%, at 79 1/8.