RealTime IT News

Internet Market Close Report for 1999.02.16

ISDEX drops 2.6% to 293.28 as Internet stocks remain lukewarm following a rollercoaster week last week. Investors are wisely making slower moves in the Internet space as they attempt to sort the prospects from the hype. with the recent spate of mergers seemingly slowing (for now), Internet stocks may follow a scattershot approach of ups and downs without any clear pattern unless merger mania steps up again.

  16-Feb-99 point change % change
ISDEX 293.28 -7.73 -2.57%
NASDAQ 2,313.87 -8.02 -0.35%
DJIA 9,297.03 22.14 0.24%

  • Compaq (NYSE:CPQ) acquires privately-held Zip2, provider of local content via the Internet. Recall that Zip2 was the firm that planned on merging with Citysearch months ago before that was called off. Zip2 reach covers the top 50 U.S. metropolitan areas. Compaq will integrate Zip2 into its AltaVista search engine. AltaVista may go public soon and the Zip2 buy would bolster Compaq's earlier acquisition of Shopping.com. Both make AltaVista more of a destination rather than search site. I estimate Compaq may have paid more than $300 million cash foe Zip2, based on the red hot IPO market and the valuations peers receive.

    Rival Ticketmaster Online-City Search (NASDAQ:TMCS), for example, has a market cap of $2.37 billion. While TMCS generates majority of revenue via ticket sales, we think Citysearch itself could be about $750 million to $1 billion valuation. If Zip2 was our estimated $300 million then Compaq may have bought it cheaply, especially if Compaq can realize more valuation at AltaVista's rumored IPO. In this IPO market Zip2 may have got some notice.

  • Yahoo's (NASDAQ:YHOO) biggest shareholder -- Softbank -- reportedly sold 3 million YHOO shares for a gain of $390 million. The sale puts Softbank's YHOO position at 28% from 30%. Softbank bought a third of Yahoo for under $200 million when the search indexer went public in early 1996. At the time we were about the only ones who believed Softbank was getting a great deal. Shortly afterwards, in fact, in 1996 YHOO actually traded BELOW its IPO price. Softbank in those days placed bets on several Internet startups in a strategy that was shotgun investing. Its few hits, however, have madeup for any duds. YHOO alone did that and continues to. Softbank's current position of 28% of YHOO is worth $7.37 billion.

    Harmon's HotWatch '99 - the hottest analysis about Internet stocks delivered to your email box each month! Last year's 10 to watch from Steve Harmon was up 300%. Will 1999 be a repeat? More info click here