April Showers in May: Top 10 Web Sites Soften in Value

The euphoria driving search and directory Web service stocks the past eight
weeks seems to have subsided for the time being as Wall Street’s attention
deficit disorder kicks back in.


Mecklermedia’s WebSite Value Index shown below, which gauges the public and
estimated private value of the top 10 consolidated Web sites, dropped more
than 7% since May 13 to an average $71 value per unique monthly user.


The commerce and high-profile marketing bonanza of February and April
fueled the phenomenal highs recently. But now that these agreements have
been discounted ahead and factored, investors need to see tangible
sellthrough of the firms doing the deals in order to fulfill the promise
paid for.


Excite’s recent $70 million commitment to play in Netscape’s garden
provides the most recent example of how new wrinkles in deals get done. The
search firm will co-brand search results in a preferred relationship with
the Internet pioneer.


Mecklermedia’s WebSite Value Index



































































































































































WEBSITE

Monthly

May 13

May 28

May 13

May 28

VALUE

Unique

Market cap

Market cap

Percent

Value

Value

Percent

INDEX

Users

or est. PMV *

or est. PMV *

change

Per

Per

change

(sorted by users)

(millions)

(millions)

(millions)

User

User

Yahoo

32.9

$ 5,683

$ 5,092

-10.40%

$ 172.87

$ 154.89

-10.40%

Netscape.com*

21.1

$ 1,600

$ 1,500

-6.25%

$ 75.79

$ 71.06

-6.25%

AOL.com*

19.7

$ 1,600

$ 1,750

9.38%

$ 81.12

$ 88.72

9.38%

Excite

19.2

$ 1,375

$ 1,280

-6.91%

$ 71.61

$ 66.66

-6.91%

Microsoft.com*

18.8

$ 2,000

$ 1,950

-2.50%

$ 106.29

$ 103.63

-2.50%

Infoseek

16.2

$ 999

$ 724

-27.47%

$ 61.65

$ 44.72

-27.47%

Lycos

15.0

$ 1,065

$ 834

-21.65%

$ 71.19

$ 55.78

-21.65%

MSN.com/Hotmail

14.9

$ 785

$ 725

-7.64%

$ 52.66

$ 48.63

-7.64%

GeoCities*

14.2

$ 365

$ 375

2.74%

$ 25.73

$ 26.44

2.74%

Disney.com*

9.0

$ 400

$ 425

6.25%

$ 44.33

$ 47.10

6.25%

TOTAL

181.0

$
15,872

$
14,656

-7.66%

$
763

$
708

-7.29%

AVERAGE

18.1

$
1,587

$
1,466

-7.66%

$
76

$
71

-7.29%


* = private market valuation, what the Web asset may fetch
at auction.
Consolidated Web site numbers from Relevant Knowledge; all other data,
Mecklermedia,
Internet.com’s Internet Stock Report – www.isdex.com



Investors don’t understand the math and XCIT shares suffered as a
result, off 6.91% since May 13. While this is nothing to get excited about,
a May 21 $72 per share ($1.7 billion) stock swap from fish processor Zapata
(NASDAQ:ZAP) did cause a few chuckles on Wall and Web Street. The guppy
capitalization company, about a fifth the size of Excite, wanted to swallow
the whale of a media firm. ZAP shares were treated more like fish wrap as
Excite promptly said no.


While we think the acquisitive wannabe was a bad match, the move indicates
what could be stirrings of mergers brewing.


The new kids on the block, emerging from the PC shadows, may be the old
kids on the block, the PC box makers (see ISR May 28 Morning Report).
Perhaps some of this week’s value evaporation has to do with the news that
Gateway (NYSE:GTW) is a gateway to the Web. Box makers can become the new
“Internet dashboards” or portal providers with a few tweaks of the
GUI/desktop.


Compaq already has one in AltaVista pro forma its Digital acquisition, if
Compaq recognizes this fact. We bet Compaq saw AltaVista as a liability
before the merger, wondering what to do with it. Ironic that it could be
the Internet front end for all new Compaqs if they position it as such.
While AltaVista isn’t shown in the top 10, it’s largely because Relevant
Knowledge (the firm that estimates users) bases its figures on U.S. surveys.


Disney.com’s inclusion here, as with all the sites shown, results from the
counting of all of its Web site users in consolidated numbers. That means
ESPN.SportsZone.com and the other Disney sites (remember Disney owns ABC
which owns Starwave which owns ESPN).


Large media companies take note: the longer you wait, the more you pay or
lose out on the Web networks. AOL’s an $18 billion market cap company.
That’s more than CBS TV Network sold for and about what Disney paid for
ABC/CapCities.


Audience reach is audience reach whether that be broadcast, cable, print or
Internet. The medium isn’t the message, the people are.

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