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NEW YORK (AP) -- Shares of Amazon.com Inc. rose Tuesday after saying it will buy a stake in Bill Me Later Inc. and make its payment service available on Amazon's Web site, in what was otherwise quiet trading for major Internet stocks. Amazon shares added $2.01, or 2.2 percent, to $95.03 by midday. The online retailer said Tuesday it is purchasing the stake but did not give terms of the equity investment, which it expects will close in the first quarter of 2008. Bill Me Later provides consumers with open-end credit accounts so they can purchase items online or on the phone without using their credit cards. In a Tuesday client note, Stifel Nicolaus & Co. analyst Scott W. Devitt said Amazon "strategically outmaneuvered" online auctioneer eBay Inc., which owns payment service PayPal. "PayPal would have been able to integrate Bill Me Later across its global platform and mitigate/monitor a long-term competitive threat to its franchise," wrote the analyst, who rates Amazon shares "Buy" with a $94 target price. Devitt added that the use of Bill Me Later's services on its site may help Amazon reduce its processing fees over time, since he believes its processing costs are about 50 basis points below those of credit card companies. EBay shares rose 93 cents, or 2.8 percent, to $34.78. Meanwhile, shares of Internet conglomerate IAC/InterActiveCorp declined 28 cents to $28.23. IAC's search engine Ask.com said Tuesday that it is unveiling a new privacy feature called "AskEraser" that lets users purge their search requests from Ask.com's computers. Elsewhere in the sector, shares of search engine operator Google Inc. declined 73 cents to $717.69, while rival Yahoo Inc. rose 10 cents to $25.30.
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