Internet sector exchange traded funds enjoyed a nearly 3% rally in eBay (NasdaqGS: EBAY) on Tuesday after an $8.5 billion deal for Skype, in which it has an ownership stake.
Skype’s acquisition by Microsoft (NasdaqGS: MSFT) is “a positive for eBay in our view as it will help unlock about $2 a share in value by monetizing eBay’s 30% equity ownership in Skype, boosting the company’s financial flexibility to pursue strategic acquisitions and/or share buyback,” said Jefferies analysts in a note Tuesday.
eBay represents 20.5% of Internet HOLDRS (AMEX: HHH). Other ETFs that hold the stock include PowerShares Nasdaq Internet Portfolio (NasdaqGM: PNQI) at 7.2% and First Trust Dow Jones Internet (NYSEArca: FDN) at 5.9%.
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