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You've Got More Than Mail: AOL Leads WEBDEX Ranking

First of all let's get the usage and reach stats out of the way:Yahoo! (NASDAQ:YHOO) ranks third in overall unique users according to data from Media Metrix. That's counting the consolidated Web sites of each of the top 10 shown. AOL (NYSE:AOL) and Microsoft (NASDAQ:MSFT) come in at the top two slots. These stats reflect home and work combined reach.

Is that bad news for the Yahooligans? Not if we look further. Yahoo ranks first in work usage while AOL drops to fourth, behind Lycos (NASDAQ:LCOS)--one reason why AOL wants to acquire Netscape (NASDAQ:NSCP), to boost the work side.

The jostling in the usage and reach have a direct bearing on what WEBDEX is all about: counting the market cap divided by unique user, looking for "user-trage" (arbitrage in user disparity). And there's tons.

AOL's bid for Netscape, for example, drew out the value of Netcenter users rather quickly as it gained 12.7% the past week.

Alta Vista, part of Compaq (NASDAQ:CPQ), finds some upside in our private market valuation of it based on its relative discount. Yet being part of CPQ makes getting at AltaVista value from an investor perspective almost impossible. Nobody buys CPQ stock for AltaVista. Yet we're coming into the belief that AltaVista's value may become pronounced if Compaq focuses a little on it, ups the ante or spins it off. We favor the spinoff.

Lycos now counts 51% more users than Excite (NASDAQ:XCIT). Its buying binge put it out ahead. Can Excite afford not to acquire traffic/users now?

Internet.com's November Dec 28 Jan 6 Dec 28 Jan 6 Percent
WEBDEX Users Market cap or PMV* Market cap or PMV* User User change
  (millions) (millions) (millions) Value Value  
AOL.com* 30.35 $6,000 $6,500 $198 $214 8.3%
Microsoft.com* 27.75 $6,900 $7,500 $249 $270 8.7%
Yahoo 27.28 $27,189 $28,719 $997 $1,053 5.6%
Lycos 25.66 $2,649 $2,834 $103 $110 7.0%
GeoCities 18.16 $1,197 $1,075 $66 $59 -10.2%
Excite 17.02 $2,606 $2,631 $153 $155 1.0%
Netscape.com* 16.99 $2,750 $3,100 $162 $182 12.7%
Disney.com 14.51 $2,750 $3,000 $190 $207 9.1%
Infoseek 11.49 $1,761 $1,645 $153 $143 -6.6%
AltaVista 10.91 $500 $600 $46 $55 20.0%
TOTAL 200.1 $54,302 $57,604 $2,316 $2,449 5.7%
AVERAGE 20.0 $5,430 $5,760 $232 $245 5.7%
AVG. without Yahoo 19.2 $3,013 $3,209 $147 $155 5.8%
) 1998 internet.com *PMV=estimated private market value for Web site only; users, media metrix

Another way of looking at WEBDEX is this: we break out this handy comparison of how each of the top 10 rates in percent vs. the average for the group. Percents tell a nice story. While all users are not valued equal brand and growth offer some insight to Wall Street's treatment or leaning towards some vs. others. Management also counts, along with earnings (yes, even for Internet companies).

Firms compared to Percentage
WEBDEX average of avg. value
   
AOL.com* 87%
Microsoft.com* 110%
Yahoo 430%
Lycos 45%
GeoCities 24%
Excite 63%
Netscape.com* 75%
Disney.com 84%
Infoseek 58%
AltaVista 22%

The percent table shows Yahoo users trade at 430% of the average for the top 10, with some justification owed to the pent-up expectations of greatness that having a global leading brand provides. Nothing more in our view. Revenue-wise, Netscape.com generates top line in league with Yahoo.

But Yahoo's consolidated under one umbrella approach so far has worked we believe, thanks to its history and memorable name.

Microsoft's (NASDAQ:MSFT) challenge at #2 reach/users seems to still be integration among its Web assets HotMail, MSN, Expedia, Investor, CarPoint, Home Advisor, and more.

While we show a blended value per Micrsooft.com(s) sites we also believe that a customer on Expedia is worth more than a software surfer downloading freeware versions of FrontPage.

Disney.com sites enter the list again after October's jostling with Infoseek (NASDAQ:SEEK), which it owns 43% of. How these two mesh will become evident as their combined effort go.com gets going.


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