Big get bigger in April

New-media gains narrow as small companies struggle

The Nasdaq rose a healthy 5.9% in April, but gains in the new-media sector were rather narrow, with the big growing bigger and the small getting smaller.

The biggest of the big, Google, saw its shares soar 30.4% last month to $574.29, while Apple shares jumped 21.2% to $173.95. And both stocks rallied further during Thursday's big session that had the Nasdaq up 2.8%.

After closing up another 3.4% on Thursday, Apple sported a market capitalization of $158.7 billion, and after Google gained another 3.3%, its market cap swelled to $185.8 billion.

Electronic Arts, the largest video game company at a market cap of $16.9 billion, enjoyed a 3.1% gain in April, but its smaller rivals lost ground during the month.

Indeed, it was tough to find a small new-media company with gains in April. Exceptions were RealNetworks, up 7.5% in April, and its music-subscription competitor Napster, up 1.4%.

The list of losers even included many that are in play, like Yahoo, which sunk 5.3% to $27.41 even though Microsoft is trying to buy the company for more than $30 a share.

Take-Two Interactive Software has an offer on the table from EA for $26, though Take-Two shares dropped 16.8% in April to $21.24.

And neither Yahoo or Take-Two took part in Thursday's powerful rally.

On Thursday, Kaufman Bros. analyst Todd Mitchell downgraded Take-Two from "buy" to "hold."

He still thinks the firm's upcoming "Grand Theft Auto IV" will be a monster hit, and that EA will acquire Take-Two, he just thinks that "EA will be a disciplined bidder and the potential upside is limited."

Moreover, he said, "Should the offer be withdrawn, we do not see another suitor in the wings."

Elsewhere in the video game sector, THQ lost 2.4% in April to $21.28, Midway was off 4.8% to $2.57 and Activision lost 1% to $27.05.

These losses came despite widespread bullishness for the video game industry. On Thursday, Wedbush Morgan analyst Michael Pachter told clients to "opportunistically add to positions in Activision, EA, Nintendo, THQ and Ubisoft."

He also said he sees the U.S. economic environment improving and he expects strong vidgame sales trends to continue at least through May.

In the satellite radio sector, Sirius and XM are trying to merge -- an allegedly bullish maneuver -- but their stocks sank 10.1% and 4%, respectively, in April.

They each surged better than 4% Thursday, though, even on news that Rep. John Dingell, chairman of the House Energy and Commerce Committee, wants the FCC to attach certain restrictions to any merger approval it may grant.

Other new-media losers last month included Netflix, off 7.7%, and TiVo down 6.1%.

Netflix, which saw its shares sink an additional 3.1% Thursday, took a nosedive midway through the month after a disappointing quarterly earnings report.

As for TiVo, the stock trades mostly on speculation as to when and what the resolution will be concerning its patent infringement lawsuit against Dish.

TiVo has won just about every battle in its multiyear legal battle, but has seen no monetary benefit as yet.

The court next takes up the matter May 30, and Mitchell, the Kaufman analyst, reiterated a week ago his "buy" recommendation on TiVo shares.

According to his calculations, TiVo should trade somewhere between $9-$12, depending on the outcome of the Dish dispute. TiVo shares closed 2.8% higher Thursday at $8.46.
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