Report Wakes Up Napster

The stock soars 27% on talk of a Google bid.
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Napster

(NAPS)

soared 27% on a disputed report that it could be a takeout target of

Google

(GOOG) - Get Report

.

The

New York Post

report sent shares of Los Angeles-based Napster up almost 60% in early action Tuesday before the digital music outfit slipped back to earth. The

Post

report, which cited no sources, said that Mountain View, Calif.-based Google was considering an "extensive alliance with Napster that could include an outright acquisition." Google couldn't be reached for comment, but

Reuters

reported that Google denied the

Post

story. Napster declined to discuss the report.

The hubbub comes three days after Bear Stearns analyst Robert Peck predicted that Google would create a competitor to

Apple's

(AAPL) - Get Report

popular iTunes site in the next three to six months. Google declined to comment on Peck's theory, and industry analysts noted that the company would face difficulties competing against Apple.

Shares of Napster rose 84 cents to $4 after trading as high as $4.95. Google rose $2.18 to $429.

Google is due to post fourth-quarter results Tuesday.