WEBDEX: Leading Web Site User Values Go North
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Buying the market leader seems to be the trend with the rise in this week's WEBDEX, Web site user value index, as Yahoo (NASDAQ:YHOO), AOL.com (NYSE:AOL), Microsoft (NASDAQ:MSFT) find more than a 10% gain since December 16. Fueling the rise are new all-time highs for more than a handful of these stocks.
At $959 per user Yahoo! leads the pack by a wide margin, as it has all year. We expect AOL.com -- valued separately from AOL in our analysis here -- to rise in value as 1999 draws upon us and AOL shifts its strategy more to embrace the Web as part of the "AOL experience."
|Internet.com's||October||Dec 16||Dec 22||Dec 16||Dec 22||Percent|
|WEBDEX||Users||Market cap or PMV*||Market cap or PMV*||User||User||change|
|AVG. without Yahoo||16.6||$2,281||$2,529||$131||$144||9.7%|
With its pending $4.2 billion acquisition of Netscape (NASDAQ:NSCP), AOL could prove to be by far the most dominating force on the Internet with its AOL.com property if it can mesh the properties and user experiences into revenue and earnings growth.
Part of the benefit in this case is that we think 1+1=3, that the synergy of >AOL.com and Netscape.com provides compelling e-commerce and marketing opportunities -- all hinging on the observation that together they appear to be the #1 Web site(s) in overall user and audience reach.
Netscape.com puts AOL way over the top in that regard in a lead that may force Yahoo to go out and buy big traffic unlike anything it's done so far.
Lycos (NASDAQ:LCOS) has been a buyer all year, turning itself into a network of Web properties that gives it a reach of 45% according to Media Metrix, just 3 points behind Yahoo's sites. Excite sits at 30% Web reach and Infoseek, 20%.
Speaking of Infoseek, as we mentioned the $50 options Disney has to exercise its warrants, it has three years to do so and those options are just that--options.
Disney may never exercise them and SEEK may be better off if it doesn't. Although if Go.com becomes successful then investors will have a way to invest in DisneySeek through SEEK. We await signs of Disney's legendary marketing muscle that has yet to be flexed here.
Compaq's (NYSE:APQ) AltaVista search engine loses some luster again in our view since the search space is crowded and AltaVista is in need of some marketing muscle of its own amid the Compaq machine. Side note: and maybe Compaq would perhaps do better making sure its PCs work--since the one we just bought doesn't print (perhaps we should have bought a DELL or Gateway).
This week we're also slicing the WEBDEX analysis to bring you a comparison of how each in the top 10 compares to the average in its value per user. Some interesting numbers pop up that show the relative disparity in how each firm is valued on a per user basis. All users are not created equal but some are more equal than others:
|Firms compared to||Percentage|
|WEBDEX average||of avg. value|
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