IMall Stock Jumps 135% on AT&T; Pact

Internet mania touched down in Santa Monica on Tuesday as shares of online retailer IMall soared 135% after it announced a marketing alliance with AT&T;’s WorldNet Internet service.

The deal gives little-known IMall a high-profile partner that can funnel 1.3 million members to its new shopping portal site, Stuff.com. Once there, WorldNet members will be privy to an array of special deals, including $20 worth of annual discounts on selected merchandise, the companies said.

The partnership is another demonstration of the creativity that goes into crafting online marketing alliances. It is also the latest example of how a single deal can more than double the market value of an obscure company overnight.

IMall shares, which started the day at $12.13, shot as high as $32.50 in active Nasdaq trading before closing at $28.50. AT&T;’s stock lost 88 cents to close at $73.31 on the New York Stock Exchange.

“The market is going nuts,” said Brett Hendrickson, an analyst with B. Riley & Co. in Los Angeles, who suspects investors were too aggressive in their bidding Tuesday.

“It’s not really clear to me how they’re going to generate the revenue from this AT&T; deal,” Hendrickson said. “Who’s to say how many hits this will generate, and who’s to say what those hits are worth, and who’s to say whether those people buy the products?”

Even IMall Chairman and Chief Executive Richard Rosenblatt conceded that he “couldn’t give all the credit” for the stock’s rise to the deal with WorldNet. But it did spur investors to take notice of his efforts to reposition IMall as a pure electronic commerce company, he said.

“Before, we were selling Web sites, doing some training, and it wasn’t as clear what our vision was,” Rosenblatt said.

But IMall recently jettisoned its training business and is focusing on a service--set to launch in February--that will give small and medium-sized businesses everything they need to open and maintain online stores for $120 a month. Those businesses would be able to join the 2,000 merchants who are already part of IMall’s online shopping mall.

“Now people are beginning to realize we deserve a valuation similar to other Internet players,” Rosenblatt said.

At least one analyst agrees that even after such a huge run-up, IMall’s stock may not be overvalued.

“There are 23 million small businesses, out of which people expect 5 [million] to 7 million of them to be on the Web selling products by the year 2002,” said Inder Tallur, director of research for Commonwealth Associates in New York. “These small businesses cannot afford to spend $1 million to provide e-commerce solutions. But they could adopt a solution like IMall.”

Tuesday’s deal is not the first between IMall and AT&T.; About two years ago, IMall conducted an online sweepstakes for the New York-based telecommunications giant, and followed up with a branded shopping area called AT&T; Marketplace.

That venture fell by the wayside after C. Michael Armstrong became chairman and CEO of AT&T;, Rosenblatt said.