Spidermania? Lycos May Be Next & Top 25 Sites
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About the only one of the top 10 Web sites that popped on @Home's $6.7 billion (fully-diluted) offer for Excite was Lycos, leading to speculation that the spider turned commune leader may be looking to sell a chunk of itself to a large media partner. Rumors to that effect got dusted off the shelf with the rattle and hum targeting Lycos perhaps trying to sell about 20% of itself.
Excite's deal drew out some value as it's up 40% to $300 per unique user in our WEBDEX metric. LCOS gained 8% to $171 per pair of eyeballs.
While Lycos may be trying to unload a minority position we think that serious buyers may want more than that -- like control and enough sway. For example, Disney acquired 43% of Infoseek for $430 million and a few Disneyland t-shirts. It has the rights to acquire majority.
Based on SEEK's value January 20 Disney's $430 million has already gone up more than 110% using SEEK's $2 billion market cap as a guide.
Possible Lycos buyers? There's the 'should' and 'could.' First the should: Time Warner, Viacom, CBS or Bertelsmann. The could (includes those mentioned plus): Microsoft, Intel (how's that for one out of the box! Intel Outside), Yahoo (which needs to make a big move now to stay in the top tier).
Let's do this with sound bytes:
|Lycos||+||Time Warner||=||Road rage|
|Lycos||+||Viacom||=||MTV, Hollywood meets Web|
|Lycos||+||Intel||=||The silicon surfer|
|Lycos||+||Yahoo||=||Web-to-Web power play|
|Lycos||+||Bertelsmann||=||Global power partner|
Forget Time Warner's Road Runner. @Home-Excite almost demands that Time Warner finally get in on large traffic. Time Warner's web sites have about 11.5 million unique monthly users now but with Lycos suddenly Road Runner (Time Warner's cable Internet) becomes 'Road Rage.'
Viacom is shown here because it's a sleeper. We've waited 4 years for Viacom to understand the Internet but maybe they'll have to wait for the 'Internet Mergers & Acquisitions For Beginners' book to come out first before they get active here.
Microsoft would be a natural-born buyer if it can do a deal amid all the hand-gesturing going on with its anti-trust trial. Has the cash, has the reach. Not sure if Lycos would mesh with Microsoft's culture.
Intel could be the dark horse here. A long shot but last week Intel threw its 1999 outlook party and its new slogan is -- Intel, #1 On The Net. They even splurged and had shirts done so we know Andy Grove is serious. If he's really serious then Lycos may be an instant path to Internet superpower.
Intel lacks a front end, user-centric online presence at all. This would be the most interesting play for both sides because Lycos could use Intel's clout on the desktop and Intel could diversify its revenue streams into something that still takes chips to make it happen, namely the Web. Intel has the cash also. Chips and salsa.
|Internet.com's||December||Jan 13||Jan 20||Jan 13||Jan 20||Percent|
|WEBDEX||Users||Market cap or PMV*||Market cap or PMV*||User||User||change|
|Blue Mtn. Arts||12.3||NM||NM||NM||NM||NM|
Bertelsmann ought to buy since it has deals with Lycos, joint ventures in Europe. But Bertelsmann may perhaps be a small stakes kind of company and not an all-out buyer.
CBS and Lycos would make a media continuum - TV, radio, Web - with the kind of cross-promotion and pollination that media undergoes. We dub this the 'media continuum' where it doesn't matter where or how you get your information or communication, just how good the service is and if it's a fair value. End-user thinking and not board-room sci-fi.
Beyond Lycos we think that the top 25 Web properties especially could see rapid consolidation and further merging with larger strategic acquirers. The new stakes seem to foreshadow this: AOL-Netscape; @Home-Excite.
If these deals go forth we expect WEBDEX value per user to find a more common footing as the more deals are done the scarcer users and large traffic become. Example: AOL agreed to acquire Netscape for $4.2 billion or $239 for each Netscape unique user. @Home's bid for Excite is $6.7 billion or $405 per unique user. The value war has only really begun.
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