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Let the Holiday Buying Frenzy Begin

Internet: Optimistic about gains for online shopping, investors push e-tailers' shares up. But analysts say run-up may not continue.

November 25, 2000|From Times Wire Services

The big boys of e-tailing had a lot to cheer about at the start of the traditional holiday shopping season Friday, even though the day didn't pass without some technological glitches.

Excited about an expected double-digit gain in online shopping this season, investors sharply bid up the depressed shares of many e-tailers.

EToys Inc., the largest Internet-only toy store, rose 49%, or 59 cents, to $1.81 in abbreviated Friday trading. Amazon.com Inc., the biggest Internet retailer, rose 15%, or $3.75, to $28.94, and Buy.com Inc., an online seller of computers, digital cameras and other merchandise, rose 25%, or 25 cents, to $1.25.

Analysts cautioned that the run-up isn't likely to continue. "I think it's just the day-after-holiday effect," said Steve Weinstein, a Pacific Crest Securities analyst.

Holiday spending on the Internet is expected to total $11.6 billion this year, an increase of more than 60% from the previous November-December period, according to Jupiter Research. The Internet-research company expects most buying to occur between now and Dec. 12, when Web stores stop guaranteeing delivery of items by Christmas under standard shipping rates.

NetRatings Inc., a Web-research company, expects 55 million people, or about one in five U.S. residents, to visit Internet retail sites in December.

Yahoo Inc. said that, through noon Friday, traffic on its Yahoo Shopping online mall was double year-ago numbers, with PlayStation 2 games, "Grinch" merchandise, DVDs, Razor scooters and digital cameras the most popular items.

With increased volume on the e-commerce sites Friday came problems.

The Grinch visited Amazon.com for about half an hour, shutting it down to customers who first reported problems about 8:30 a.m. The outage also blocked shoppers from making purchases at the related Toys R Us online shop.

Customers trying to access Amazon.com's main site during its outage found a notice saying the retailer would be "right back."

"This was absolutely not related to holiday traffic," said Amazon spokeswoman Ling Hong. "This purely was an internal hiccup." She declined to elaborate.

Electronics retailer Bestbuy.com saw its site slow almost to a halt beginning Thursday night when it was swamped with shoppers who had heard a false rumor--spread on the Internet--that it was selling Sony Corp.'s PlayStation 2 consoles. The units have been virtually sold out since being released in the U.S. on Oct. 26.

"While we anticipated increased site volume, the traffic has been much greater than we expected," said Best Buy spokeswoman Laurie Bauer.

Several other e-tailing companies got boosts on Wall Street from the beginning of the shopping season. Shares of Barnes & Noble.com Inc., the No. 2 Internet bookseller, gained 12%, or 31 cents, to $2.88, while Egghead.com Inc., a seller of computers, printers and other items, rose 18%, or 25 cents, to $1.63. Cyberian Outpost Inc., operator of the Outpost.com site, increased 12%, or 19 cents, to $1.75.

And EBay Inc., the leading Internet-auction site, said it was opening a holiday store where digital cameras, video game consoles and other gifts are available for bidding. Its shares rose 12%, or $4.06, to $36.94 on Nasdaq Friday.

Not sharing in the holiday cheer was SportsLine.com Inc., the world's second-most popular sports Web site. On Friday, it ended its $120-million agreement with MVP.com, the company known for its ties to three sports superstars--football's John Elway, hockey's Wayne Gretzky and basketball's Michael Jordan--because the closely held Internet sporting goods retailer missed two payments and owes it $107 million, SportsLine said.

"Michael Jordan, Elway and Gretzky are finding out that they don't have the same mystique with people buying online as they did with die-hard sports fans," said John Shanley, an analyst with First Security Van Kasper.

Since SportsLine linked itself in December with three of the biggest names in sports, its shares have fallen 87%, to $8.16. The Bloomberg U.S. Internet Index fell 58% during the same period.

*

Bloomberg News and Times staff writer David Colker contributed to this report.

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