ISDEX loses ground early in trading but recovers to end the day in positive territory, as the Dow and NASDAQ both drop. The latter two fall victim to Latin American stock market concerns (apparently no 'living La Vida Loca') at least for today. Now that we're in the middle of the summer swelter I expect we may see some white-water rafting with Internet stocks (slow moves and then raging rapid moves) as second-quarter results start popping up.
Less focus now on brand names and more on emerging brands seems to be my thinking lately. In other words, growth more than girth for now.
CDNow (NASDAQ:CDNW) gets tapped to dance with the devil in the blue suede shoes. By any other name it's the recording industry, Sony and Time Warner, through their Columbia House music buying club service. Terms: merging Columbia House with CDNow to create a new firm, with 1 new firm's share for 1 CDNW share in a swap. CDNW shares drop 8% to $20 5/16 per share on the news. I think the deal makes sense for CDNow given the intensely competitive music selling landscape. Time Warner and Sony are two of the handful of global music powerhouses, both can drive CDNow into a globally-marketed enterprise. On the downside, CDNow loses some of its luster as an independent firm.
On valuation, I think having Time Warner and Sony as owners puts CDNow in leagues beyond that of Amazon.com, which also sells music. Time Warner and Sony can crush Amazon in this space--if they get their act together with the Internet--which is not a given by any means.
DoubleClick (NASDAQ:DCLK) agrees to acquire smaller rival ad software outfit NetGravity (NASDAQ:NETG) for 0.28 shares of DCLK common stock for each share of NETG common stock. The deal is below NETG closing price Monday but NETG had run on deal expectation since late June. I see the move by DCLK as a way to add staff fast more than adding technology or software. With its other pending buy, Abacus, DoubleClick looks rapidly consolidates for the future. I expect more deals soon. 24/7 next? That was the rumor last week, now I think DCLK has to digest these two buys first. More likely, a rival acquires 24/7.
iVillage (NASDAQ:IVIL) agrees to acquire Lamaze Publishing for $86.7 million stock, or 7.8x last year's revenue for the parenting media firm. The deal brings some content and marketing reach to iVillage. But I also think it saddles iVillage with offline assets. iVillage justifies the deal by saying Lamaze reaches 75% of all women giving birth in the United States and 90% of all first time parents. A great reach but at what expense. How valuable are Lamaze's magazines in a world where online info is the future? Overall, however, at $86.7 million it seems fairly cheap.
"Fresh and provocative" -CBS Marketwatch, who
named Steve Harmon to "Best of Wall Street," and only objective independent investment analyst honored
"I am a huge fan of Steve Harmon's analysis"
-Kleiner Perkins' John Doerr about Steve Harmon