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K-Tel Stock Up 93% on Playboy Deal

November 04, 1998| From Bloomberg News

MINNEAPOLIS — K-Tel International Inc. said Tuesday that it will sell music on Playboy Enterprises Inc.'s Web site, pushing its stock up 93% even though analysts expressed skepticism that the deal could make K-Tel a competitive force in online music.

K-Tel, which advertises music compilations such as "Hooked on Classics" on television, will list its 250,000 music titles in a jointly developed store on http://www.playboy.com. Terms of the agreement weren't disclosed. Playboy said the value could approach $1 million.

"Internet stocks have definitely been on a roll over the last three weeks," said Ryan Jacob, portfolio manager of the Internet Fund. "Given the way these stocks have reacted to news lately, K-Tel's gain isn't surprising."

Analysts said K-Tel is too late to compete with No. 1 retailer CDNow Inc. and Amazon.com.

"K-Tel will never be a leader in online retail. They're too behind the big guys," said Mark Hardie, an entertainment analyst with Forrester Research Inc.

K-Tel's shares rose $6.38 to close at $13.25 on Nasdaq, but are down 61% from the record high it reached in May, four days after starting its Web site.

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