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WebSite Value Index: Yahoo! Beats The 'Street & Tops List

Mecklermedia's WebSite Value Index shows Yahoo! (NASDAQ:YHOO) once again topping the list of users and value per user. April 8 the Internet media firm posted $0.08 earnings per share for first quarter when Wall Street expected just $0.04. Without investment income, however, EPS would have been $0.05.

First quarter earnings reached $4.28 million on $30.2 million revenue, up 20% vs. fourth quarter.

While advertising remained the main revenue stream, commerce revenue gained and accounted for 22% of revenue. Page views now reach 95 million per day, up from 65 million last quarter, according to Yahoo! president Tim Koogle.

On a primary share value basis our WebSite Value Index shows Yahoo! users valued at $137.25--two or three times as much as any one rival and more than twice the average. In after hours trading April 8 YHOO shares were climbing north so this number could also today.

Here's the latest tally:

Mecklermedia WebSite Value Index

  February March   April 1 April 8   April 1 April 8  
  Unique Unique Percent Market cap Market cap Percent Value Value Percent
  Users Users change or est. PMV * or est. PMV * change Per Per change
(sorted by March users) (millions) (millions)   (millions) (millions)   User User  
Yahoo! 31.3 32.5 3.8% $ 4,483 $ 4,457 -1% $ 138.05 $ 137.25 -1%
Netscape.com* 23.1 23.4 1.3% $ 700 $ 650 -7% $ 29.91 $ 27.77 -7%
Excite 16.5 19.3 17.2% $ 870 $ 852 -2% $ 45.00 $ 44.08 -2%
Microsoft.com* 17.9 18.0 0.7% $ 1,200 $ 1,250 4% $ 66.60 $ 69.38 4%
AOL.com* 14.1 17.7 25.8% $ 1,250 $ 1,200 -4% $ 70.48 $ 67.66 -4%
Lycos 10.2 15.1 48.3% $ 796 $ 906 14% $ 52.59 $ 59.92 14%
GeoCities* 12.5 14.4 15.3% $ 250 $ 260 4% $ 17.34 $ 18.04 4%
MSN.com/Hotmail 8.3 14.4 73.7% $ 475 $ 725 53% $ 32.95 $ 50.29 53%
Infoseek 13.7 13.5 -1.2% $ 637 $ 629 -1% $ 47.01 $ 46.44 -1%
AltaVista* 7.6 7.5 -1.6% $ 235 $ 210 -11% $ 31.41 $ 28.07 -11%
TOTAL $ 155 $ 176 13% $ 10,895 $ 11,139 2% $ 531 $ 549 3%
AVERAGE $ 16 $ 18 13% $ 1,090 $ 1,114 2% $ 53 $ 55 3%

user figures: Relevant Knowledge (www.rkinc.com); primary shares for market cap; * est. PMV=private market value. 1998 Mecklermedia. www.Internet.com

Meanwhile, Lycos (NASDAQ:LCOS) and MSN.com jump a notch in user rankings according to Relevant Knowledge's monthly survey. Both bought growth with Lycos acquiring Generation X free Web page site Tripod for $58 million stock and Microsoft acquiring HotMail for an estimated $450 million.

Although both deals aren't new, Relevant Knowledge, the firm that surveys users, includes the acquisitions on its latest March user survey.

Our analysis reveals that Lycos' 48% rise in users pushed it to a market cap per user of just under $60. Of public companies listed here, that puts it second only to Yahoo! in per user valuation.

By the way, LCOS stock is up 43% since its deal with Tripod was announced February 3, although we think the run is based on the $30 million in commerce deals it slung together.

The Tripod deal gave it a demographic marketing base to sell to if they're buyers.

If the values mean anything, then Excite (NASDAQ:XCIT), which still draws more users, looks like it may be at a discount to Lycos. Excite attracted 19 million users in March but its per user value is $44. Is there $16 difference per user between Lycos and Excite in favor of Lycos?

As Microsoft.com commits to its Start page and ramps up content and resources in many areas it's easy to see that the corporate Web site becomes more of an "online service" itself. This is not marketing but tools, information, travel, investment, car buying and more. That could be Yahoo!'s biggest threat yet.

It looks like MSN and HotMail could be fusing into a freebie Web service altogether. Given the HotMail user numbers being added to MSN's total, we adjusted MSN.com's estimated private market value although don't carry HotMail at full retail ($450M).

Similarly, AOL.com moves to compete in many ways with AOL proper, and we adjust its estimated PMV in light of that and the Web-based guides that outnumber it at the moment. Since AOL caches much of its content for users, the actual number of users for AOL.com could be higher.

With a total market cap of $1.6 billion we allocate $650 million to Netscape.com itself, which includes NetCenter. In a competing bidding situation that figure could be higher--it depends who bids. On an "Internet media" company valuation basis, we think of Netscape as a media effort, communications company (IP telephony, Internet faxing services, etc.), and ultimate Web guide in a relevant way--not a "me too" could be a YHOO-like valuation.

It's ironic that Netscape loaned Yahoo! its first PC servers and steered all its own traffic to Yahoo! in the early days as the Web guide default. Proof that change is constant, and nobody wins by default anymore.

As a footnote here, the WebSite Value index is not a one-size-fits-all valuation metric. Location, brand, capital, management, future outlook, assets, alliances and a host of other factors effect valuations.



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