Internet Shares Luring Buyers; Key Index Hits Four-Month High

Internet stocks are back in the spotlight--or at least, they’re in the beams of some aggressive investors’ flashlights.

The Interactive Week index of 50 major Net stocks rose 1.7% on Wednesday to its highest since April 10 amid a resurgence of buying interest in some once red-hot sectors:

* Commerce One, Clarus Corp., Ariba Inc. and other companies specializing in business-to-business electronic commerce jumped after analysts predicted more large industrial companies will use online exchanges to conduct business.

Commerce One (ticker symbol: CMRC) rose $10.88, or 21%, to $63.25. About 27.3 million shares changed hands, making it the most active U.S. stock.

Clarus (CLRS) gained $8.13 to $58.13 and Ariba (ARBA) jumped $8 to $152.50.

Companies from General Motors Corp. to IBM Corp. are developing Web exchanges to boost their sales and cut costs in processing their purchase orders. Retailers such as Kmart Corp., Gap Inc. and Safeway Inc. have said they’ll use exchanges to buy from more than 100,000 suppliers and distributors.

Commerce One and others write the software that powers the transactions. Excitement about the business pushed Commerce One as high as $165.50 earlier this year, before Net stocks crashed in spring.

Major industrial companies will continue to invest in online marketplaces to sell their products, said Credit Suisse First Boston analysts Christopher Vroom and Ian Toll, in a report issued Wednesday.

“People are starting to realize that B2B is still a huge opportunity,” said Gregg Speicher, an analyst for Hoak Breedlove Wesenski & Co.

* CMGI and Internet Capital Group Inc., which own and manage business-to-business Internet companies, also rallied. CMGI (CMGI) gained $5.19 to $45.81 and Internet Capital (ICGE) rose $4.81 to $36.

* Amazon.com (AMZN) leaped $3.31 to $42.94, highest since June, after a Goldman, Sachs & Co. analyst said the Net retailer is cutting costs and will benefit from overseas expansion and partnerships with other companies.

Amazon.com is expected to generate enough revenue to cover fixed costs in the fourth quarter, Goldman Sachs analyst Anthony Noto said. Improved efficiency, combined with plans for attracting customers and boosting sales, bodes well for the holiday season, Noto said.

The stock is “definitely on my radar screen,” said analyst John Spytek at Banc One Investment Advisors, which held fewer than 12,000 shares as of June. “It’s still so far off from its heyday,” when it peaked at $113. “It’s not a warming up [to the stock]; it’s more like a defrosting.”

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Internet Stocks ... Again

Internet-related stocks have helped stoke Nasdaq in recent weeks. On Wednesday, the Interactive Week index of 50 major Net-related shares hit its highest close since April 10.

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Weekly closes and latest for Interactive Week index *

Wednesday: 552.70

Source: Bloomberg News