Marketing Deals Boost Yahoo!, broadcast.com

Deals with News Corp. and Softbank boost the recently hard-hit Net stocks.
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Today, the U.S. Tomorrow, the world.

Broadcast.com

said today it was entering into an agreement with Japan's

Softbank

launching a Japanese-based Internet audio and video programming company. Shares of Broadcast.com were up as much as 24 1/4 to 159. (Editor's Note: Softbank holds a minority stake in

TheStreet.com

.)

Broadcast.com has been among the most volatile of the Internet stocks. It reached a high of 289 1/2 on Jan. 12, only to fall to 102 1/2 by Jan 22. The declines came after the stock's lockup period ended, allowing insiders to start selling shares. Adding to declines, broad-based selling hit Internet-related stocks on concerns they had moved too far too fast.

Also involved in a marketing agreement were

Yahoo!

(YHOO)

and

News Corp.

(NWS) - Get Report

. Under the agreement, Yahoo! will run promotional spots of News Corp. shows beginning this Sunday. Yahoo! will in turn receive publicity during News Corp. programming. Yahoo! was up 12 3/16 to 298 3/8 in recent trading.

Derek Brown, an analyst with

Volpe Brown Whelan

, said volatility in Internet stocks is increasing as investors pay more attention to news. "I think they're being scrutinized a little more as investors become more aware of the industry," said Brown. "But at the same time, there's overreaction to the upside and downside to announcements, and I don't expect that to ease anytime soon."

Talking Up RF Micro Devices

Shares of

RF Micro Devices

(RFMD)

were up more than 5 points after a "silent period" on the company was lifted.

Eric Zimits, an analyst with

Hambrecht & Quist

, said the company is now out of its quiet period after pricing a public offering Thursday. Zimits said H&Q, which does underwriting for RF Micro, has raised earnings estimates for the company, though he hadn't yet calculated exactly what his new estimate would be.

RF Micro announced Tuesday that earnings were 31 cents a share for the fiscal third quarter. That compares to the consensus estimate of 28 cents a share from

First Call

.

OnSale Margins Stabilize

Adding details to a disconcerting preannouncement last week,

OnSale

(ONSL)

executives said the company's margins are going to remain flat for several years.

Falling margins have plagued the online auction house for more than two years. The company said this week that fourth-quarter operating margins would come in between 8.5% and 8.9%, down from 13.8% in the fourth quarter a year ago. Onsale forecast a loss of between 15 cents and 17 cents a share for the quarter, compared with a loss of 9 cents in the year-ago quarter.

CEO Jerry Kaplan told

TSC

that Onsale's margins won't keep sliding, although they will stay flat for three or four years. To shore them up, the company is adding more ads to the site, charging transaction fees and offering warranties, analysts say. And it's introducing atCost, a business to sell computer equipment wholesale -- the idea being the high-volume business would offset deteriorating margins. "It's all a question of scale," Kaplan says.

"The good news is that long-term it's a more sound strategy than the one they had," says Charlie Finnie, a

Volpe Brown Whelan

analyst who rates OnSale hold. But Finnie and others say margins could keep dropping until atCost is up and running. Even after it's in business, atCost's gross margins will be lower than existing margins in the auction business, even as it cannibalizes some of OnSale's existing auction business. (Volpe has no underwriting relationship with the company.)

So what happens to margins at the end of the three-to-four-year period? It's unclear. "In Internet time, that is somewhat of a lifetime," says OnSale CFO John Labbett.

OnSale was down 2 7/16 at 46 11/16 in recent trading.