New media dancing in September

Surge spills into October as Netflix, Yahoo, Apple, Google hot

The Nasdaq advanced a healthy 4% last month, but throw a dart at a board full of new-media stocks and you're likely to strike one that outperformed. The fun continued Monday with the Nasdaq jumping 1.5% and The Hollywood Reporter Showbiz 50 index rising 1.2%.

One of last month's leaders was Netflix, which leapt 18.4%. Even its stodgier competitor, Blockbuster, rose 8.3% in September plus another 3.9% on Monday.

In the middle of last month, Thomas Weisel analyst Gordon Hodge upgraded Netflix from "market perform" to "overweight" based on its assumption that Blockbuster -- more concerned with reining in spending than it had been -- won't compete so ferociously with Netflix for the online business.

The analyst's new target, though, which went from $17 to $21, already has been exceeded. Netflix closed the month at $20.75 and added another 2.3% to $21.22 on Monday.

Apple was up 10.8% last month and another 2.9% on Monday. Citigroup analyst Richard Gardner last month raised this year's per-share earnings estimates and next year's, as well as his price target, now at $185.

Apple, which closed at $156.34 on Monday, is up 85% so far this year and up a mammoth 2,000% since 2001, the year the company introduced its first iPod.

Apple's competitors in the world of Internet music distribution, Napster and RealNetworks, also were higher, the latter up 8.8% and the former up 7.9%. Both also tacked on healthy gains Monday.

Morgan Keegan analyst Tavis McCourt initiated coverage of Real last month with an "outperform" rating and of Napster with "market perform." McCourt said Real should trade up to $10 a share, while they closed Monday at $7.11.

A slightly larger Apple competitor, Microsoft, released to much hype its "Halo 3" video game, which analysts think will boost the fortunes of the companies that publish games for the Xbox 360 because "Halo 3" is popular enough to spur sales of the console that it plays on.

Microsoft said $170 million in "Halo 3" games were sold during its first day on store shelves, and on Monday, Kaufman Bros. analyst Todd Mitchell upped his Xbox 360 estimate for the year from 16.5 million units to 17.1 million.

Goldman Sachs analyst Mark Wienkes launched coverage last month of the video game sector with an "attractive" view, placing "buy" recommendations on Electronic Arts and Activision though only a "neutral" rating on THQ.

While THQ was a rare underperformer last month, dropping 13.2%, EA advanced 5.8% plus another 4% on Monday and Activision was up 10.8% last month and an additional 2.8% on Monday. THQ also gained ground Monday.

Yahoo shares advanced an impressive 18.1% in September and continued its run Monday, though the stock is only up 6% so far this year, closing Monday at $27.04. Last month, Jefferies and Co. analyst Youssef Squali reiterated his $34 target on shares.

Competitor Google, rumored to be interested in taking a stake in social networking firm Facebook, saw its shares rise 10.1% last month and another 2.7% on Monday.

Also in September, Wall Street suddenly seemed convinced the merger intentions of Sirius Satellite Radio and XM Satellite Radio ultimately will be fulfilled. Sirius shares advanced 17.5% last month, while XM was up 13.6%. Sirius, however, did not participate in Monday's rally, while XM was up another 2.8%.