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Up & Down Wall Street: WebSite Value Index Shows Who's Hot

Just a few months ago (March 25) in WEBDEX the average value per user sat at about $57. The average now is at $121.

As the most valued Web site per user in the top 10 at $283 per user, let's spend a little time on Yahoo!'s second quarter results, announced July 8 after the market closed. With the results better than expected we may see a rise in YHOO and other Internet shares today.

Yahoo! (NASDAQ:YHOO) operating income beat a consensus target for its second quarter, $0.15 vs. First Calls' $0.09 average. We were closer with our estimate of $0.12 published here on July 1. The results are before acquisition charges relating to Yahoo!'s buy of store-in-a-box software maker Viaweb.

With the $44.1 million Viaweb buy, however, 2Q net loss reached $36 million, or $0.81 loss per share.

Page views climbed 21% to 115 million per day vs. March usage. Revenue jumped 192% to $41.2 million vs. 2Q97. Yahoo! also announced a 2-for-1 stock split. Softbank, which already owns a large chunk of YHOO, acquired $250 million more or 1,363,440 shares in private placement.

Pro forma Softbank owns 31% of YHOO. As an aside, with YHOO trading at lofty levels, investors went to Japan to buy shares in Softbank as a way of owning one-third of Yahoo! and Softbank's operations. Softbank shares climbed in Tokyo 100 to 6100 yen.

Oddly, Relevant Knowledge, the firm that surveys Web users and tallies how many uniquely use a site, shows some drops in usage for many in the top 10, Yahoo! included. Disney.com, Lycos (NASDAQ:LCOS), AOL (NYSE:AOL), Microsoft (NASDAQ:MSFT) and GeoCities showed usage gains. Here's our latest WEBDEX (WebSite Value Index) numbers:

Mecklermedia's May June Percent July 1 July 8 July 8 Percent
WEBDEX Users Users change Market cap or PMV* Market cap or PMV* User change
website value index (millions) (millions)   (millions) (millions) Value  
Yahoo 31.4 30.4 -3.0% $7,863 $8,618 $283 9.6%
AOL.com* 22.9 23.2 1.2% $2,750 $2,900 $125 5.5%
Excite 19.4 18.9 -2.4% $2,481 $2,259 $119 -8.9%
Netscape.com* 18.9 18.5 -2.2% $2,000 $1,900 $103 -5.0%
Microsoft.com* 17.4 18.0 3.5% $2,250 $2,400 $133 6.7%
MSN.com/Hotmail 14.8 15.2 3.0% $1,400 $1,450 $95 3.6%
GeoCities* 14.0 14.8 5.9% $575 $525 $35 -8.7%
Lycos 13.7 15.0 9.7% $1,520 $1,436 $96 -5.5%
Infoseek 13.3 12.0 -9.1% $1,184 $1,080 $90 -8.8%
Disney.com* 8.5 10.0 17.9% $1,250 $1,250 $125 0.0%
TOTAL 174.1 176.1 1.1% $23,273 $23,818 $1,205 0.7%
AVERAGE 17.4 17.6 1.1% $2,327 $2,382 $121 0.7%
^ primary shares used to compute market capitalization for ease of comparison; *PMV = private market value or what the Website could fetch at auction, an estimate based on assets, peers, comparables, mergers/acquisitions, growth, revenue and other factors.

We reiterate that Infoseek (NASDAQ:SEEK) is the "Rodney Dangerfield" (gets no respect) of Internet portals. Even with Disney anointing it as a partner and tossing in ESPNSportsZone.com, ABC.com, Starwave and Disney.com, Wall Street ponders what it all means.

We think it adds up to an Infoseek north of $2.3 billion in 12 months.

Infoseek-Disney would probably be number four in the list if shown the way Lycos-Tripod are grouped or MSN-Hotmail. If counted as one group in terms of pure reach, Microsoft-MSN-Hotmail-MSNBC would be on top.

GeoCities is in the IPO pipeline so we hold its value steady as a rocket ship about to explode. However, its redesign to look more like a portal could be a mistake, and cause some value to drain away in the homogenized, pasteurized, 31 flavors of portals.

GeoCities is not a search engine and that's precisely why we thought it would be more valuable in the longer term. It's a place to be, not one to pass through, as many of the portals are. There's plenty of untapped metaphors for presenting information and services on the Web. "Guides" is one that's used (with many Web designers thinking more like librarians) more than the dozens of other metaphors we could use to present information. Associative thinking is more Web based, assembling information sideways, not top to bottom or bottom to top.

The manner in which information flow is presented affects value. Just as the browser was a metaphor for presenting the unfriendly text-driven world of pre-Mosaic, and a whole industry was spawned. There's billions of dollars now floating on Wall Street and 100 million users globally. It's the metaphor, the way that information is presented, that matters.