Internet Market Close Report for 1998.10.27



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Moves and news:

  • AOL (NYSE:AOL) reports its first fiscal 1999 results with a 65% jump in revenue to $858 million and $108 million net income (with tax credits), or $0.39 EPS, beating the Street handily. Subs grow about 1 million to 13.5 million and AOL announces a 2-for-1 stock split, its fifth since IPO in 1992.

    Related news, AOL’s new buy, ICQ, has signed up more than 20 million users, 7 million since AOL acquired in June. Untapped user relationships. It adds 65,000 more per day.

    As we’ve said before, AOL looks the closest to being the “Microsoft” of the Internet in every way. Yahoo is close but AOL’s net income surpasses Yahoo’s revenue on a quarter to quarter basis. Yes, AOL has access revenue, and it’s looking pretty good at $21.95 per month per subscriber–still the best way to extract value from members. A monthly dividend so to speak.

  • Open Text (NASDAQ:OTEXF) reports its first quarter revenue of $17.2 million vs. $7.6 million 1Q prior year. Net income reaches $2.3 million or $0.11 EPS fully-diluted vs. loss of $1.5 million or loss per share of $0.08 1Q of its fiscal 1998.

  • Infoseek (NASDAQ:SEEK) shares rise on a “buy” from Volpe which bases its reasons on the Disney magic factor. SEEK sells Disney 43% for $70 million cash and its Starwave assets for a deal valued at $430 million announced months ago but still pending approval. Of course the marketing and benefits of being associated with Disney are well chronicled here in Internet Stock Report for several months now.

    One thing we got from reading the merger document: Disney has rights to acquire majority of SEEK and has capped the price per share at $50 per share. Said another way, Disney is prepared to pay as much as $50 per share to acquire control, meaning it would have to acquire another 7.1% (for 50.1% total) once the deal closes. SEEK closes at $31.3125 today, up 9.8%.

  • Network Solutions (NASDAQ:NSOL) posts third quarter revenue of $25.4 million, up 109% vs. 3Q98. Net income climbs 144% to 3 million or $0.18 EPS. That’s the benefit of inheriting a monopoly on domain registrations: grow your business as the default .com registrar. Despite all indications of competition to come we think NSOL has an enviable lead and brand. It also has the ability to create complementary business services for those registering, easier said than done, however. we estimate it’s missing out on two or three natural revenue streams already.

  • Have you ever used eBay? What do you think? Let us know!

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