eMailbag Monday/Tuesday: Excited @Home, MarketWatch, Earth Springs, TicketMaster

Cable Internet provider @Home(NASDAQ:ATHM) kicked off the four-day
trading week Tuesday by announcing it is buying search engine Excite in a stock swap valued at $6.7
billion. Our early analysis shows the fit may be a good one: combining
next-generation speed with first-generation audience, giving the two a
bridge to the future. Why does Excite need an exit?


AOL’s $4.2 billion pending deal for Netscape (NASDAQ:NSCP) alters the
landscape. Lycos’ (NASDAQ:LCOS) move to be a community hub and Infoseek’s
(NASDAQ:SEEK) deal with Disney all leave Excite in a distant second to Yahoo.


While the others have made moves Excite has not, yet. Yahoo has the luxury
of being a leader but Excite could leapfrog the others in the cable
Internet space with Tuesday’s deal.


Also fueling the logic of a deal, in our opinion, is Excite’s deal
with Netscape for guides may be a short-termed thing if AOL does indeed
take over Netscape. The deal brings back to the forefront the
age-old debate of if the large Web sites may become acquisition targets for
large media companies.


We’re not sure how long Time Warner, Viacom, or the broadcasters can sit by
and watch the Internet eat their lunch. Disney
clearly gets “it” with its Infoseek
Go.com
, CBS has arrangements with
Sportsline and Marketwatch. But the real game in our view is high-volume
users, “audiences,” which are “buyers,” “sellers,” and everything in between.


And now from the emailbag (special holiday Jan. 18/19 edition) first reader
up writes:


“Marketwatch.com closed at $97; Data Broadcasting closed at $22. CBS owns
38 percent of MKTW and DBC owns 38 percent of MKTW. I can’t understand how
MKTW is valued at $97 and DBCC is valued at $22? Would you please shed a
little light on this for me? Would you hold DBCC if you owned it?”


Reply: Marketwatch (NASDAQ:MKTW) stunning first day trading — it
closed up 473.53 percent from IPO price — seems to indicate that investors
found its story unique among the Internet group. There aren’t any
Internet-based financial content producers public, or at least not in the
same vein as
Marketwatch.


We also attribute the huge gains to short-term buys. On why MKTW zoomed
while co-parent company which it was spun out of dropped, in this case DBC
(NASDAQ:DBCC), people would perhaps rather own the shares first-hand rather
than through another entity.


On owning DBCC or not, we don’t give buy, sell or hold
recommendations. Everyone’s investments should be of their own choosing and
according to their own criteria for risk and reward after doing their own
research–it’s your money. For our original report on Marketwatch Click
here.


Mind Links


“Dear Steve: I enjoy reading your Internet Stock Report, I find it well
thought out and useful, but I do have a question concerning your ELNK & MSPG
comparison (see ISR January 15). The Street does seem to value MSPG more
than ELNK, but could that come from MSPG making money and growing bigger by
acquisitions and great service.


If ELNK had not teamed up with Sprint where might they be
at today? What MSPG has accomplished so far they have done without the help
of a big brother with deep pockets and if a big telco comes along and takes
a look at MSPG (so go the rumors) where might they go from here. Steve
thank you for your time and thanks for your work on this Internet Stock
Report. Keep up the good work.”


Reply: One of the key differences as many readers pointed out is
Mindspring’s (NASDAQ:MSPG) profits. Our analysis, however, tends to view
both of these firms as similar services and always shooting for the
future more than the present.


We believe the next wave of Internet usage
will be bigger, faster, wider, deeper and stronger than the current one.
The real pay day will begin when your grandmother, grandson, cousin and
everyone else uses the Internet as commonly as a TV or telephone. So
today’s earnings don’t matter as much as investing in tomorrow.


Right now the ISPs and others are warming up for the main
event, nothing short of ubiquitous access, anywhere, anyone, anytime–but
most of all easy, fun and compelling.


Earnings do matter but remember
that CompuServe was once profitable before H&R Block fumbled the ball while
for years AOL (NYSE:AOL) posted losses until it reached what we dub “chain
reaction” (the part after critical mass).


Ticket To Paradise?


“Was wondering why Ticketmaster/CitySearch is not included in you list of
Internet stocks? This seems like a good solid co., will also have an
auction site, and yet it isn’t moving like other Internet stocks? Any
reason?”


Reply: We follow TickeMaster/CitySearch (NASDAQ:TMCS) and think
Ticketmaster/CitySearch holds a lot of potential but it’s not clear how
ticketing and city info guides click yet. Is this an e-ticket to paradise
or a search for bigger and better things. We’re talking with its CEO soon
and will bring you the interview here.

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