RealTime IT News

NBCi: Ready for Prime Time?

This week, Web portal, NBCi , announced its site redesign. While it is much better, there are concerns.

Let's face it, the portal business has been brutal. Even the premier portals, such as AOL and Yahoo, have been listless. So, in light of this, how can we get excited about a 12th ranked portal like NBCi?

Well, so far, investors definitely have doubts. The 52-week price range is 5 7/8 - 106-1/8. The current stock price is $6-3/16 and the market cap is $386 million, which pales in comparison to Yahoo, whose market cap stands at $49 billion.

Although, it was smart of NBCi to consolidate its properties. You see, NBCi is an amalgam of different companies, such as Xoom (which allows the creation of personal Web sites) and Snap, a search engine. With the new launch, the various properties become one. Of course, NBC is an extremely powerful brand. Also, it is extremely difficult to manage and promote differing brands.

But will this be enough to make investors happy? While the stock popped on the announcement of the new site strategy, I think it will be a temporary reaction.

Rearranging names and corporate structures will not deal with the intrinsic problems in the portal industry. Simply put, the dot-com capital draught means tough times for advertising models. Apparently, close to 90% of NBCi's revenues come from Net companies.

For example, last quarter NBCi announced it would have a quarter worse than expected. It was no surprise that the company announced layoffs of 170 employees.

True, there will be a shift towards traditional advertisers. But this takes time. Besides, competitors like Yahoo, AOL and MSN will continue to put pressure on NBCi. So, even though NBCi is at very low levels, the stock price will probably stay there for some time.