Internet Market Close Report for 1999.02.16

ISDEX drops 2.6% to
293.28 as Internet stocks remain lukewarm following a rollercoaster week
last week. Investors are wisely making slower moves in the Internet space
as they attempt to sort the prospects from the hype. with the recent spate
of mergers seemingly slowing (for now), Internet stocks may follow a
scattershot approach of ups and downs without any clear pattern unless
merger mania steps up again.



point change

% change













  • Compaq (NYSE:CPQ) acquires privately-held Zip2, provider of local
    content via the Internet. Recall that Zip2 was the firm that planned on
    merging with Citysearch months ago before that was called off. Zip2 reach
    covers the top 50 U.S. metropolitan areas. Compaq will integrate Zip2 into
    its AltaVista search engine. AltaVista may go public soon and the Zip2 buy
    would bolster Compaq’s earlier acquisition of Both make
    AltaVista more of a destination rather than search site. I estimate Compaq
    may have paid more than $300 million cash foe Zip2, based on the red hot
    IPO market and the valuations peers receive.

    Rival Ticketmaster
    Online-City Search (NASDAQ:TMCS), for example, has a market cap of $2.37
    billion. While TMCS generates majority of revenue via ticket sales, we
    think Citysearch itself could be about $750 million to $1 billion
    valuation. If Zip2 was our estimated $300 million then Compaq may have
    bought it cheaply, especially if Compaq can realize more valuation at
    AltaVista’s rumored IPO. In this IPO market Zip2 may have got some notice.

  • Yahoo’s (NASDAQ:YHOO) biggest shareholder — Softbank — reportedly
    sold 3 million YHOO shares for a gain of $390 million. The sale puts
    Softbank’s YHOO position at 28% from 30%. Softbank bought a third of Yahoo
    for under $200 million when the search indexer went public in early 1996.
    At the time we were about the only ones who believed Softbank was getting a
    great deal. Shortly afterwards, in fact, in 1996 YHOO actually traded BELOW
    its IPO price. Softbank in those days placed bets on several Internet
    startups in a strategy that was shotgun investing. Its few hits, however,
    have madeup for any duds. YHOO alone did that and continues to. Softbank’s
    current position of 28% of YHOO is worth $7.37 billion.

    Harmon’s HotWatch ’99 – the hottest analysis about Internet
    stocks delivered to your email box each month! Last year’s 10 to watch from
    Steve Harmon was up 300%. Will 1999 be a repeat?
    info click here

  • Get the Free Newsletter!

    Subscribe to our newsletter.

    Subscribe to Daily Tech Insider for top news, trends & analysis

    News Around the Web