Website values continue to hop and drop at the whim of a Wall Street
enamored by Cinderella stories. The latest to put on the magic glass slippers:
Lycos, up 9.5% in value per user in our latest WEBDEX survey.
LCOS ran on its buying spree in the community space, improved margins for
quarter, and made a pro forma move to offer more than search and guides.
Earlier in the year Wall Street rewarded Excite’s hunter-gatherer dance and
deal mentality with a bump and jump in market capitalization and hence,
value per user. With its aggressive write down deal with Netscape, however,
Excite has lost some of its luster the past week.
|User tallies per www.rkinc.com *PMV|
= private market valuation estimate for Web asset only based on
financials, reach, users,
brand value, peers, recent mergers and acquisitions (c)
A few months ago we were one of the first to raise eyebrows and discuss in
the Internet Stock Report about Excite swallowing the cost in a one-time gulp
on its balance sheet. That hurts earnings today but helps them tomorrow
since the cost is behind Excite.
Recall April 29 when Excite agreed to
pay Netscape $86 million cash/stockwarrants to offer its services on
Netscape.com. The odd part is that XCIT looks like it’s taking a hit on its
stock value from doing so now, rather than right after July 16 when it
wrote down $56.8 million related to the Netcenter partnership.
In the Excite-Netscape deal we think Netscape could emerge the winner of
the two anyway, as it makes its site stickier with guide services in
the store, rather than sending its users into the search wilderness. Note
the latest $113 per user allocated to Netscape.com as a result.
Also driving that: Despite what many say, Netscape’s browser still leads in
marketshare, eyeballs and orbs that continue to ogle the default site. Call
it “Mozilla’s Law” – inertia of the default home page driving traffic and
revenue. Not quite the Godzilla of 1995 but a large traffic lizard
Since going public a few Web pages ago, GeoCities (NASDAQ:GCTY), meanwhile,
takes a hit in value per user since August 19. We attribute this to
investors debating the FTC news item, as the novelty of being public wanes,
and the market itself treats the Dow Jones Industrial Average itself like
an Internet stock it’s so volatile–let alone a newbie stock like GCTY. It
comes with the territory.
GeoCities also may have a thing or two to prove
revenue-wise before Wall Street jumps on board in a big Yahoo-like
Infoseek (NASDAQ:SEEK) continues to be Infomeek as user value
declines to $67. Ironically, we believe equity partner Disney.com valuation
may be on the rise–you have to discount ahead Disney’s marketing and
content treasure trove somewhat in its Web efforts.
How many of the above firms can place a URL on every film, every ABC TV
show or network
promo, every book, poster, lunch box, toy, ticket, ride, game, apparel
item, etc., to point to a Web content or commerce pitch? One. Disney.
Microsoft would love that position.
As for why SEEK shares have not
risen dramatically since June 18 when Infoseek sold a 43% stake to Disney,
we think that if they keep falling perhaps Disney may acquire the 67% it
doesn’t own. We
think keeping SEEK public makes more sense, maybe changing the name:
DisneySeek.com, for the semantically-challenged investor. Apparently the
magic kingdom (Disney.com/Infoseek) by any other name is not the magic
kingdom in valuation, yet.