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RealTime IT News

Deals Happen: Big Sites Buy Growth; Small Firms Sell On Wall Street

The new game in town is more like a mosh pit of leading Internet firms slam dancing in a headbanger's ball. Latest tub thumping: More than $2 billion in deals erupted over the past few days as AOL bought ICQ, Yahoo! bagged Viaweb, Network Associates snatched up Dr.Solomon, and NBC acquired a stake in Snap!

Deal Roundup: The Web's Rubber Rodeo

Hunter

Target

Price

Terms

Network Associates

Dr. Solomon's

$ 640

100%

NBC

CNET/Snap!

$ 26

4.99% CNWK; 19% Snap!

Yahoo

Viaweb

$ 49

100%

AOL

Mirabilis/ICQ

$ 287

100%

all $ in millions. (c) 1998 Mecklermedia, The Internet Media Company

Yahoo!'s buy of Viaweb, a software firm with applications to create store fronts on the Internet, could move it into the 'yellow pages' meets Wal Mart area. Not only a guide but a "why don't you buy now that you're here" approach.

Network Associates' (NASDAQ:NETA) $640 million offer for European anti-virus software market leader Dr. Solomon's affirms our belief that security software may be long overdue for mergers and acquisitions. The latest rumor has a big networking outfit considering an acquisition of CheckPoint Software (NASDAQ:CHKPF), the leader in firewall software (the stuff that protects corporate networks from hackers). Long overdue by our reasoning.

Meanwhile, AOL was about the only firm that could outlay $287 million cash for Mirabilis, the Israel-based software maker behind ICQ, an instant chat product with a reported 6 million "active" users and perhaps double that in overall casual downloaders. Rumors had a small cadre of Internet heavyweights making runs for ICQ, but none had the clout of an AOL which pioneered its own instant chat offering on its online service.

While those deals were eating up bandwidth and brain cells, cache network and search engine wholesaler Inktomi (NASDAQ:INKT) went public on June 10 38% above its initial target range, doubled its first day of trading, and ended up on June 11 at $40.50 per share up 125% from its IPO price.

All that in a stock market many thought was bearish on IPOs. The oversubscribed offer put another $18 million proceeds in Inktomi's coffer and went from pre-IPO revenue multiple of 14x to 46x by June 11.

Cache the numbers here:

Inktomi

Filed

IPO

Percent

Pro forma IPO valuation estimates

April 16 at:

June 10 at:

difference

Offering

2.00

2.25

13%

Greenshoe

0.20

0.34

69%

Total offer with greenshoe

2.20

2.59

18%

Target IPO price per share

$ 13.00

$ 18.00

38%

IPO gross proceeds w/ greenshoe

$ 28.60

$ 46.66

63%

Revenue multiples on $20M 1998 estimate

pre IPO

at IPO

11-Jun

Market cap/est. 1998 revenue

16x

21x

48x

Enterprise value/est. 1998 revenue

14x

20x

46x

(c) 1998 Mecklermedia, The Internet Stock Report

The cash flow in aftermarket burners may open up the IPO pipeline now for more Internet firms, similar to what Yahoo! did in 1996. We expect IPO candidate PointCast to benefit from Inktomi's run, for one.

And now for The Internet Stock Report's Question Of The Day: Do you think PointCast's pending IPO will be a home run or ho hum? Why? Click and e-mail us now--look for a sampling of your answers in eMailbag Monday.



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