Internet Market Close Report for 1998.05.05

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  • Excite (NASDAQ:XCIT) deal announced yesterday to pay Netscape $70 million to provide search services causes XCIT to drop 8% to $66.75 per share today as Wall Street says “whoa” to the size of the deal for a company (Netscape) with waning browser share.

    Excite expects to gain about 10 million page views a day from the deal. Our snapshot analysis of the numbers: on a $25 CPM and 25% page view sell-through (based on a net 10 million page views a day that Excite expects to gain) that implies $22.5 million a year or $45 million in ad sales over the two-year term of the deal–to Excite.

    But we believe that Excite can do better with marketing deals and targeted CPMs, delivering the right ad to the right user at the right time for better CPM (thanks to its MatchLogic buy).

    And the gain it will have as a brand could be worth more than $50 million alone in a space that depends on brand more than anything else to differentiate. In short, XCIT seems to be oversold today while Wall Street applauded NSCP, who we think didn’t gain as much from the deal other than cash to build its Web site. To us Excite appears to be the real winner. The real loser? Infoseek (NASDAQ:SEEK). Check our stats on which search and navigation service benefited the most from Netscape’s search button link: (company, percent overall traffic from Netscape) — Yahoo!, 10%; Excite, 11%; Lycos, 10%; Infoseek, 26%.

  • Mecklermedia (NASDAQ:MECK), producer of this report and original Internet content, announces two new Internet World trade shows to be held in Egypt and Turkey. The events will be co-produced by London-based ITE Group PLC but majority owned by Mecklermedia. That brings to 30 Internet World shows in 25 nations.

  • Concentric Network (NASDAQ:CNCX) gets an initial “buy” rating from Bear Sterns. We believe Concentric’s virtual private network solution offers a compelling solution to corporations to leverage the cost efficiencies of the Internet while enjoying the security of closed networks.

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