Love and Mergers

Feb 14 2000

Post-earnings season is a tough one for investors, particularly those who have been investing in high-flying technology and Internet stocks. It's as good a time as any for the sector to correct, but it remains the sector where everyone who is investing wants to put their money.

So while the Nasdaq managed a 23.10-point gain Monday to close at 4418.55, it actually spent much of the day in negative territory before coming back late in the session. The recovery came amid strength in the broader market along with a recovery in the bond market. TheStreet.com Internet Sector index ended the day down 14.84 points, or 1.3 percent, at 1139.60, but traded as low as 1125.62. The Dow rose 94.63, or 0.91 percent, to close at 10519.84

Perhaps the most excitement came late in the session, when CNBC reported that America Online may be interested in buying IDT 's stake in Net2Phone. Net2Phone, a software maker for phone calls over the Internet closed up 12.19, or 25 percent, at 60.75, though it traded as high as 68.38. IDT ended up 7.19, or 32 percent, at 29.5, while AOL closed down 1.38, or 2 percent, at 55.63. IDT currently owns 48 percent of Net2Phone's common stock and has 58 percent voting control, while AOL owns 5 percent of Net2Phone.

But a couple of acquisitions did take place. Phone.com, which makes software that allows Internet connections through wireless devices, announced that it had acquired Onebox.com, a wireless messaging services company, for around $850 million in stock. It's the second major purchase for the company in the past two weeks. Last week, Phone.com purchased Paragon Software for $500 million in stock. Phone.com ended the day down 2.63 at 118.5.

CMGI also made its second acquisition in a week, buying Tallan, a privately-held provider of Internent and e-commerce professional services for $920 million in stock and cash. Last week, CMGI said it would be buying online auctioneer uBid . CMGI finished up 3.43 at 115.5.

Finally, CareInsite, a provider of online medical services, was part of a package that Healtheon /WebMD picked up with its purchase of Medical Manager . Under terms of the deal, Healtheon/WebMD will pay 1.65 shares, or $90.75 a share, for Medical Manager, and 1.3 shares, or $71.50 a share for CareInsite shares not owned by Medical Manager. Medical Manager owns 69 percent of CareInsite. Total value of the deal was listed at $4.8 billion. Healtheon/WebMD, one of the most active players up to now in terms of buyouts and making partnerships with other companies, finished up 1.63 at 56.63. Medical Manager finished up 21.75, or 33 percent, at 86.75, while CareInsite ended up 4.13 at 72.

i2 Technologies was not involved in a merger, but it was part of a partnership with United Technologies and Honeywell that will launch MyAircraft.com, an online marketplace for aerospace products and services. i2 ended up 19.13, or 8 percent, at 259.88 on the news.