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Napster Shares Up; Google Denies Rumors
AP, Tuesday January 31, 12:52 pm ET
Napster Shares Hang Onto Gains Even Though Google Denies Rumors About Alliance, Acquisition

NEW YORK (AP) -- Napster Inc. shares held on to a solid advance Tuesday even though Google Inc. dismissed rumors it is discussing an alliance that could involve acquiring the online music service.

Napster's stock surged as much as 60 percent in early trading after the New York Post reported that Google has been pushing for a deal with Napster rather than build its own music service from the ground up, according to music industry insiders.

Analysts also have been speculating that Google would soon debut an online music site, but the company has denied those plans and has refused to say whether it is looking to partner with an existing competitor, the Post said.

But in the Post's story, a spokesperson said Google had "nothing to announce at this time." Follow-up reports late Tuesday indicated the Web search giant had no plans to create a music store or compete with other retailers.

The move would be a logical next step for Google in its mission to catalog the world's information, analysts say.

Shares of Napster nonetheless jumped as high as $4.95, and recently were up 92 cents, or 29.5 percent, at $4.04 on the Nasdaq. The stock has been steadily falling from a 52-week high of $9.84 a year ago, and is above a recent low of $2.95.

Napster, which was bought out by software firm Roxio Inc. in 2003, relaunched as a subscription-based music service to challenge the pay-per-download model adopted by Apple Computer Inc.'s iTunes. Earlier this month, Napster said more than 500,000 users have signed up for its service, and also denied reports suggesting the company might put itself up for sale.

Google shares gained $9.41, or 2.2 percent, to $436.23 on the Nasdaq.

http://biz.yahoo.com/ap/060131/napster_google.html?.v=1