Yahoo! Leads Net Sector Higher This Morning

After posting better-than-expected earnings last night, Yahoo! was up, and TheStreet.com Internet Sector index was moving with it.
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Sure,

Yahoo!

(YHOO)

surpassed even the most optimistic expectations when it reported earnings Wednesday night. But should solid results from one of the only profitable Net businesses be enough to lift the entire Internet sector? Apparently so.

Net stocks were mostly higher early today, led by Yahoo!, which was recently up 9 1/4, or 5%, at 185, allaying concerns that Yahoo! would sell off after its earnings report as it has in the past. Its strong numbers and the renewed enthusiasm in the sector as it enters the fourth quarter have drowned out the naysayers.

TheStreet.com Internet Sector

index was recently up 18.69, or 2.6%, at 727.43.

Dain Rauscher Wessels

reiterated its buy-aggressive rating on Yahoo!, with a price target of 255. And

U.S. Bancorp Piper Jaffray

analyst Safa Rashtchy wrote in a note that this was only the "tip of the iceberg," and the real growth will be seen when e-commerce revenues take over during the holidays.

Are there any concerns in the Net sector? Sure, but you have to search. Internet stocks have moved awfully far awfully fast and could be ripe for profit-taking. In addition, the bond market continues to slide, though stocks have not paid much attention to Treasuries lately. The market also faces a key employment report on Friday, which could rekindle fears of

Fed

action just three days after it adopted a tightening bias.

Also among bellwethers,

eBay

(EBAY) - Get Report

was up 13/16, or 0.5%, at 152 1/2 after trading as high as 157. Analysts at

Deutsche Banc Alex. Brown

claimed they were browsing the site last night and discovered a local search function that allows consumers to search for products based on geography/city, which they expect to attract a broader audience of sellers, particularly of larger items.

Deutsche Banc, which has done underwriting for eBay, upped its price target on the online auction site to 175 from 150 while reiterating a buy rating. It noted that eBay could post a 5% upside to its third quarter revenue forecast of $58.0 million, while earnings per share should be slightly ahead of its 1-cent estimate. That matches the

First Call/Thomson Financial

estimate.

eBay competitor

uBid

(UBID)

was one of the leading percentage gainers on the

Nasdaq

early on, up 5 1/4, or 16%, at 37 7/8. Gains came on news that

Infoseek's

(SEEK)

new auction service, GO Network Auctions, which was launched Wednesday, is being powered by uBid.

Merrill Lynch

analyst Henry Blodget wrote that in exchange for powering the auction community, uBid will be featured on the GO Network Auctions page. uBid will pay GO a predetermined percentage of gross profit on items purchased on the uBid site by customers coming from the GO Network.

The Price of Postage Went Up

Taking its cue from

Stamps.com's

(STMP) - Get Report

rising stock price,

E-Stamp

filed to up the price of its shares for its pending initial public offering Wednesday.

In a filing with the

Securities and Exchange Commission

, the provider of electronic postage increased its expected offering price from $14 to $16 per share, up from $12 to $14 per share. Based on the 6.5 million shares being offered, the extra $2 per share could generate an additional $13 million.

The deal, being underwritten by

Donaldson Lufkin & Jenrette

,

Banc of America Securities

,

Deutsche Banc Alex. Brown

and

DLJdirect

, is expected to raise as much as $104 million, based on an offering of $16 per share. After expenses associated with the offering, the company expects to use about 65% of the proceeds for sales and marketing, with the remaining 35% being used for general corporate purposes.

San Mateo, Calif.-based E-Stamp booked no revenue through June 30, 1999. As of Sept. 24, the company had delivered its postage products to about 14,000 customers. The Internet postage software and hardware sells for $49.99. In addition, users are charged a 10% convenience fee when postage is purchased, with a minimum fee of $4.99 and a maximum fee of $24.99 per purchase. For the six months ended in June, the company had an operating loss of $12.5 million.

After the offering, E-Stamp will have 37.64 million shares outstanding, and a $16 per share price would give the company a market cap of more than $600 million. Competitor Stamps.com, by comparison, went public June 25 at $11 per share. The stock closed Wednesday at 33 9/16, up more than 200%, giving that company a market cap of $1.17 billion.

-- Suzanne Galante