Two Portals Better Than One

InfoSpace flexed its market cap muscle yesterday
with its after-the-bell land-grab of journeyman Web portal Go2Net
. The $4 billion deal pays Go2Net less than a 50% premium over its
Wednesday close, but considering deep-pocketed Vulcan Ventures has given
its blessing to the merger along with top banana Russell Horowitz, it
suggests insiders are consolidating while the going’s still good.

For InfoSpace, the acquisition adds
another feather to its cap. The company has made some aggressive moves
recently to boost its position in the Internet and wireless content space,
and Go2Net adds a handful of valuable offerings to its repertoire. Web
enthusiasts and armchair investors are probably most familiar with Silicon Investor, one of the Net’s
first and arguably largest financial communities, or Go2Net’s MetaCrawler, also one of the first
meta search engines on the Web.

While InfoSpace’s original business model centered largely around its
co-brandable portal directory, like many portals and content players, the
company has embraced Wall Street’s latest hot wireless trend. But rather
than a toe-in-the-water approach, the company has undergone a permanent
makeover that’s included dropping its dot-com moniker and inking a bevy of
meat and potato deals with major wireless carriers.

After the dust settled, InfoSpace has emerged a leading enabler of Internet
wireless applications and with it, a market cap that nearly rivals the
likes of e-tailing giant or online
auctioneer eBay . By establishing key
partnerships with Verizon Communications , AT&T
, and SBC Communications , InfoSpace has effectively aligned itself with blue chip carriers
that blanket over three quarters of the domestic wireless market.
Punctuating its wireless initiative, InfoSpace tapped former Vodafone
exec Arun Sarin to take the reins as CEO in

The success story for Go2Net, on the other hand, has been the road less
traveled. The upstart dove into the new issues market back in the mid-90s
and received mixed reviews from analysts and investors alike. No matter how
hard the newcomer toiled alongside sexier portals like Yahoo!
, Excite , and Lycos
, Go2Net never quite seemed to command comparable respect from
the investment community.

Despite its slow start, the company’s luck started changing once investors
took notice of its strong revenue growth and eye toward profitability. When
hemorrhaging losses still ruled the day, Go2Net was one of only a handful
of moneymaking dot-coms. With a massive cash investment from billionaire
tycoon Paul Allen early last year, Go2Net joined an elite group of
so-called Internet blue chips. With Allen’s windfall, the company also
boasted one of the cash-wealthiest war chests amongst its peers.

Today, the two companies converge on top of their respective games.
Separately, the futures of InfoSpace and Go2Net continue to look promising;
but as a combined entity, the pair will be a dominant force competing with
the Net’s who’s-who. Together, the two Web properties will reach a target
audience comparable to the top 10 most trafficked sites on the Internet.
InfoSpace gets a profitable, cash-rich partner, while Go2Net adds a sexy,
new chapter to its life cycle.

Any questions or comments, love letters or hate mail? As always, feel
free to forward them to [email protected].

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