TECH STOCKS: Amazon's Prime Hike Pays Off In Stock Price

By Rex Crum, MarketWatch

SAN FRANCISCO (MarketWatch) -- Shares of Amazon.com Inc. climbed Thursday, suggesting investors approve of the online retailer's plan to raise the price of its popular Prime subscription by $20 a year.

According to a letter Amazon sent out to its Prime subscribers, the move to the new price of $99 a year will take effect on the anniversary of a member's subscription. Amazon(AMZN) is offering a promotion for new members to lock in their Prime subscriptions at the $79 rate for the first year if they sign up within the next seven days.

For their annual fee, Prime subscribers get free, two-day shipping on almost anything sold via Amazon and have access to more than 150,000 movies and TV show episodes available on the company's Prime Instant video service.

Amazon had said on its fourth-quarter earnings call in January that it was likely to raise the price on Prime subscriptions because of increased shipping costs.

Amazon shares were up more than 2% Thursday morning at $378.60.

"People think churn [subscriber turnover] will be low," said Mark Mahaney, of RBC Capital Markets. "The $99 isn't scary, so it's accretive."

Also read: Prime price hike could bring in $374 million a year

Other tech stocks that rose Thursday included Apple Inc. (AAPL), Yahoo Inc. (YHOO), Intel Corp. (INTC) and Netflix Inc. (NFLX).

Decliners included NetApp Inc. (NTAP), which gave up 1% to $37.43. Late Wednesday, the storage-technology company said it would trim about 600 jobs, or around 5% of its workforce, and take a charge of between $35 million and $45 million in its fiscal fourth quarter, which ends in April.

The Nasdaq Composite Index (RIXF) gave up early gains and was recently down 6 points to 4,317. The Philadelphia Semiconductor Index (SOX) was also in the red.

More must-read news from MarketWatch:

Poll: Will you still use a more expensive Amazon Prime?

Jeff Reeves: 3 high-tech dividend stocks

Retail sales rise for the first time in three months

Subscribe to WSJ: http://online.wsj.com?mod=djnwires