CDNow: The Honeymooners

Cross your fingers. The first company on my M&A Bingo scorecard looks close to tying the knot.
CDNow announced last week that it had narrowed a
list of more than two dozen interested suitors. I’d be surprised if the
original pool numbered even half a baker’s dozen; but nevertheless, the fat
lady is about to sing for the struggling music e-tailer.

In anticipation of a pending marriage, shares of CDNow nearly doubled off
its 52-week low, on roughly 20-times its average daily volume. Individual
investors are banking on favorable buyout terms to be unveiled early this
week, possibly before this column goes to press. I’d expect Grupo Carso to broker a deal that has CDNow going for roughly
$8-$10 a share.

AltaVista Calls it Splitsville

AltaVista has unveiled its latest strategy to continue as a going
concern. Split the portal dinosaur in two and see if Brits have an interest
in used goods. AltaVista execs say
that plans are in the works to spin-off its non-American operations in
Europe before year’s end.

This shouldn’t come as a bombshell to retail investors in the U.S., who
already rejected this company’s IPO more times in the last two years than I
can remember. And that was including the non-American assets.

AltaVista has slashed its workforce wholesale in a desperate effort to trim
costs before the money tree withers. Too late. At this company’s
astonishing cash burn rate, trouble isn’t far off. Alta is so very
desperate to raise badly needed cash, that it’s willing to take the show
abroad to retail investors who aren’t as privy to its highly publicized IPO
soap opera.

The cream has since risen to the top in the portal space, with Yahoo! and Google already declaring victory, while
second and third tier players scramble to find a new line of work.

Excite@Home and
have seen the writing on the wall, both busying themselves with decidedly
non-portal endeavors. Showing that it boasts more follow than leader,
AltaVista managed to create only mild enthusiasm from Web users with the
debut of its Google search engine knockoff Raging Search.

How many times should an also-ran pronounce “We’ve postponed our IPO due to
poor market conditions,” before it takes a long hard look in the mirror and
realize it ain’t the market conditions. Never has been, never will be.

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