Rumor has Amazon.com (NASDAQ:AMZN) apparently considering acquiring a
software e-tailer. There’s a few offering this type of thing now:
Beyond.com (NASDAQ:BYND), software e-tail network Digital River
(NASDAQ:DRIV), Egghead.com (NASDAQ:EGGS) to name a few. Most of the buzz
centers on Beyond.com, whose CEO Mark Breier, coincidentally, was VP
marketing at Amazon for two years, helping the bookseller grow revenue from
$16 million in 1996 to $150 million in 1997.
It would be slightly ironic if Mark landed back in Seattle at Amazon as VP
software sales if a deal gets done here.
The rumors flying around help boost Beyond.com (formerly Software.net but
which changed it’s name–some say–so that it rhymes with “.com” as
Amazon.com also does). BYND gained 86% to $14.875 per share since October
29 putting its market cap north of $400 million, probably already too much
of a premium even if the rumor has merit.
INTERNET.COM’S | Ticker | Share price | Share price | % change |
IPO INDEX | symbol | 11/5/98 | 10/29/98 | period |
Beyond.com | BYND | $14.88 | $8.00 | 85.9% |
24/7 Media | TFSM | $15.25 | $11.81 | 29.1% |
Verisign | VRSN | $37.25 | $29.94 | 24.4% |
Cyberian Outpost | COOL | $14.88 | $12.25 | 21.4% |
Netgravity | NETG | $11.38 | $9.63 | 18.2% |
DoubleClick | DCLK | $35.25 | $30.00 | 17.5% |
ISS Group | ISSX | $32.75 | $28.00 | 17.0% |
Inktomi | INKT | $89.75 | $79.06 | 13.5% |
CDnow | CDNW | $8.50 | $7.50 | 13.3% |
GeoCities | GCTY | $33.75 | $31.38 | 7.6% |
Exodus | EXDS | $33.50 | $31.25 | 7.2% |
Broadcom | BRCM | $84.25 | $80.19 | 5.1% |
Digital River | DRIV | $11.00 | $10.75 | 2.3% |
eBay | EBAY | $81.19 | $79.88 | 1.6% |
Broadcast.com | BCST | $49.38 | $52.50 | -6.0% |
TOTAL | 552.94 | 502.13 | 10.1% | |
AVERAGE | 36.86 | 33.48 |
(c) 1998 Mecklermedia, Internet.com
Overall cumulative customer accounts for Beyond.com increased 47% to
431,000 3Q98 vs. 2Q98. Even so, at this juncture we don’t think it makes
sense for Amazon to acquire, given the recent success of its home-made
music store opening which, in one quarter, surpassed the then-existing
Internet music retailer CDnow (NASDAQ:CDNW) in sales.
Something as “non-brand” as Digital River (NASDAQ:DRIV) makes a much better
fit in our view with Amazon, should it decide not to go the “do it
yourself” route. Recall that Amazon acquired IMDB, Junglee and a Euro Web
bookseller recently so it’s not adverse to buying.
Beyond’s rise, and the recent resurgence in e-tail stocks, helped boost
Internet.com’s IPODEX up a collective 10% since October 29, and a blended
132% from original IPO price. Each of these companies went public in 1998.
24/7 (NASDAQ:TFSM), meanwhile, benefited from Microsoft’s reported $250
million stock deal for privately-held LinkExchange, an ad network with a
reported 400,000 sites but what could be an actual 800,000 depends on who’s
counting. That values each Web site–majority of them small business Web
sites–between $300 to $600 each.
Said another way, Microsoft just acquired a Web network for pennies to the
dollar. For a few hundred dollars per site it now has an open channel to
reach that small business segment with its host of offerings from NT to
e-mail to commerce.
LinkExchange we hear, also may enjoy gross margins in the 90% range,
something that probably clinched the deal.
DoubleClick (NASDAQ:DCLK) enjoyed the deal rub-off also, up 17.5% the past
week. It’s notable, though, that LinkExchange chose to sell privately
rather than go public. We attribute that to the topsy-turvy nature in
September and October of the IPO market.
Interest in advertising extended itself to Netgravity (NASDAQ:NETG), which
approaches the Web ad market with a software rather than service solution.
It sells ad server software.
ISS Group (NASDAQ:ISSX) agreed to acquire technology from database security
assessment firm DBSecure November 2. The technology allows customers to
find security holes in Microsoft SQL Server and Sybase databases, two of
the more popular database formats, as well as year 2000 problems.
