K-TEL GIVES BACK MOST OF GAIN.

Byline: Dave McNary Daily News Staff Writer

Shares of K-Tel International Inc. continued their wild performance Wednesday, surging 43 percent after announcing a plan to raise up to $20 million, then giving up most of the gain as skepticism replaced bullishness.

K-Tel stock finished the day up $1.1875 to $13.50 a share, a 9.6 percent gain. More than 3.1 million shares changed hands during the session, and the issue hit $17.625 - three times its 1998 low of $5.1875 and half its 1998 high of $33.9375, reached after it launched its ktel.com Web site in May.

Shares of K-Tel, best known for hawking music compilations on late-night television, have jumped on several occasions this year due to investor frenzy over Internet stocks, then fallen back due to concerns over the speculative fever and fundamental problems at the Calabasas-based company.

K-Tel's gain was overshadowed Wednesday by the surge in online bookseller Amazon.com Inc., which soared $46.25 to $289 after a CIBC Oppenheimer analyst predicted the stock will reach $400 in 12 months. Shares have already risen eight times above their lowest level this year.

Analysts have cautioned that the speculative frenzy among Internet stocks will lead to overvaluation.

``The frenetic buying of Internet stocks is going to make the 17th century tulip buyers look like value investors by comparison,'' said Rick Berry of J.P. Turner & Co. ``I think a lot of K-Tel's strength is the meteoric rise of Amazon, moving on its coattails.''

In Wednesday's developments, K-Tel said its board has approved a plan to issue stock to raise $15 million to $20 million in equity to maintain its Nasdaq listing. The exchange told K-Tel last month that it faced delisting because it didn't meet a requirement of $4 million in tangible assets.

K-Tel, which had tangible assets of $450,000 at the end of September, said it had received $2.88 million of additional equity during the current quarter from employee stock options being exercised. On Tuesday, the board also granted Lawrence Kives, who became president in October, an option to buy 200,000 shares of common stock at $11.1875 per share.

Kives said he will exercise the option in its entirety by Dec. 31, which should push tangible assets over the $4 million level. The board also authorized management to raise $15 million to $20 million of additional equity in order to meet long-term capital requirements and assure continued listing on the Nasdaq.

K-Tel also said it will lose $1 million in the current quarter, mostly due to investments in electronic commerce.

During the session, two law firms announced separately they have filed class-action suits against K-Tel alleging securities fraud by artificially inflating the price of shares in October and November.

``When everything's all said and done, K-Tel may be a player but the bottom line is that no one really knows,'' Berry said. ``The margins in e-commerce are going to be razor-thin because if you have something popular, it's only going to be a matter of time before someone comes along and takes it away. The true beneficiary will be the consumer.''