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WEBDEX: Top 10 Web Sites Get Buy Eye Happy

In the past 12 months the average value per top 10 Web site user soared 461% to today's $365 per pair of eyeballs. Yahoo has led the way by far with its current value per unique user north of $1200.

With Yahoo's $5 billion bid for GeoCities (NASDAQ:GCTY) it bumped the GeoCitie's WEBDEX metric up 54% to $192 per user. Now here's the fun 'what if' part.

What if GeoCities users start commanding Yahoo-like user valuations once the Yahooligans absorb the community site en toto? Here's one scenario: the one plus one equals three or four, depending on the caffeine quotient on Wall Street.

Internet.com's December Jan 27 Feb 3 Jan 27 Feb 3 Percent
WEBDEX t Users Market cap or PMV* Market cap or PMV* User User change
  (millions) (millions) (millions) Value Value  
AOL.com* 31.0 $7,200 $7,750 $233 $250 7.6%
Microsoft.com* 27.5 $9,500 $9,000 $346 $328 -5.3%
Yahoo 27.4 $33,148 $35,338 $1,211 $1,291 6.6%
Lycos 26.4 $4,788 $5,604 $182 $212 17.0%
GeoCities 19.0 $2,359 $3,637 $124 $192 54.2%
Netscape.com* 17.5 $3,400 $3,750 $194 $214 10.3%
Excite 16.5 $5,547 $5,430 $335 $328 -2.1%
Disney.com 13.6 $3,500 $3,750 $258 $276 7.1%
Infoseek 12.3 $2,252 $2,348 $183 $191 4.3%
Time Warner 11.5 $2,000 $2,200 $174 $191 10.0%
TOTAL 200.1 $71,694 $76,607 $3,064 $3,281 7.1%
AVERAGE 21.2 $7,966 $8,512 $340 $365 7.1%

If GeoCities user base under Yahoo commands even half of Yahoo's current per user value that implies a Yahoo market cap of about $47 billion. Sounds ridiculous, especially given the huge gaps between the values per user of Yahoo and all the other sites.

Could Yahoo get there? maybe. We think it's one of the few top 10 sites that is able to stay independent and enjoys a brand leadership, traffic leadership that's still underleveraged.

If Amazon.com (NASDAQ:AMZN), for example, can go borrow $1.25 billion in debt we wonder what kind of leverage Yahoo has untapped. Considerable. And Amazon's not in the top 10 in traffic. True, its traffic are buyers.

Here's an indication of the real Web business model: sell users to marketers. We've been telling that story for years. But AOL just signed a $500 million deal with First USA to sell its credit cards to AOLers over the next 5 years.

5 years on the Web is like 20 in any other industry so we think the agreement may seem frothy now (and also tinged with hype). But we also recall Intuit paying $40 million for Excite's finance channel, which proved to be cheap real estate indeed. At the time few believed so.

If we look at the consolidation among the top 10 here it's amazing that 1999 has moved so fast and so far. AOL-Netscape; @Home-Excite; Yahoo-GeoCities. Microsoft needs to buy big to stay in the race now that AOL and Yahoo have thrown down the gauntlet.

There's only Lycos left, which helped boost its value per user 17% the past week. Dark horse is #11 site Time Warner (CNN, and the failed Pathfinder fiasco). Microsoft buys smarter but pays too much and Time Warner probably is still trying to figure out @Home's $6.7 billion bid for Excite.


Catch Steve Harmon at Canada Internet World, Feb 5, talking about Internet stocks in the great white north with the top analysts and finance folks. See events.internet.com now!


Accolades for Internet Stock Report:

"Fresh and provocative" -CBS Marketwatch, who named Steve Harmon one of the top Internet stock analysts and only independent one honored

"I am a huge fan of Steve Harmon's crack analysis" -Kleiner Perkins' John Doerr